Under the microscope - Association of Costs Lawyers

CostsLawyerMAY/JUNE 2017 | ISSUE 3

www.associationofcostslawyers.co.uk

Third-party politicsExperts in the QOCS era

Public law’s disgraceThe value of judicial review

Dominic ReganCosts phobia, and why to avoid it

Under the microscopeComplexity in the spotlight at the ACL Conference

Court success.

www.lexisnexis.co.uk/costslawyer

0114-071 Court Success_Advert.indd 1 28/01/2014 12:45

Careers inblack and white...

Manchester OfficeImperial CourtExchange QuayManchesterM5 3EB

Telephone:0161 745 7517

Out of hours:07824 661108

Email:[email protected]

Website:www.rbuklegal.com

For further information on these and any other vacancies – or for general career or salary advice – please contact Claire Heshon on 0161 745 7517

MANCHESTER £50,000+EXPERIENCED COSTS LAWYER

An expanding and highly regarded costs firm in Manchester is currently seeking a Senior Costs Lawyer/Draftsman to join their successful team. You will have a vast amount of experience working within costs and you’ll be dealing with a varied and interesting caseload consisting of complex, high-value Personal Injury, Clinical Negligence and Commercial Litigation. Experience of Budget drafting and attending CCMCs is essential. Great career progression opportunities as well as an excellent remuneration and benefits package.

EXPERIENCED COSTS DRAFTSMAN £35,000+ MERSEYSIDE

A leading costs practice based in Merseyside is seeking an experienced Costs Draftsmen to join their team. You will have a minimun of three years experience under your belt and will be accustomed to drafting bills of costs, replies, PODs and budgets. The firm have a diverse client base and you will be dealing with a mixed caseload including PI, Clin Neg and Commercial Litigation on a fast-track and multi-track basis.

LONDON £35,000+COSTS DRAFTSMAN

An opportunity has arisen with a highly reputable costs firm in London for a Costs Draftsman. The successful candidate will have circa two-four years costs experience and be accustomed to drafting bills of costs. You will be dealing with a varied caseload which will have an emphasis on PI and Clin Neg matters including high-value, complex issues. Offering excellent quality work as well as competitive salary and realistic career progression opportunities.

CHESHIRE £30,000+COSTS DRAFTSMAN

A new opportunity has arisen with a successful costs firm in Cheshire. The firm are looking for a Costs Draftsman to join their busy team. You will have experience of dealing with your own caseload of claimant costs matters. Your caseload will include a mixture of Personal Injury files from simple RTA through to more complex Clin Neg. You will be competent at drafting bills, budgets and negotiating settlement. A competitive salary is on offer along with a good quality caseload.

NORTH EAST £25,000+IN-HOUSE COSTS DRAFTSMAN/NEGOTIATOR

A leading law firm in the North East is seeking a Costs Draftsman/Negotiator to join their busy team. The successful candidiate will have a minimum of two years experience under their belt of drafting bills and negotiating settlement for PI cases. You will be dealing with a mixture of fast track and complex multi-track files. An excellent opportuntiy to join an established costs team.

GREATER MANCHESTER £18,000+IN-HOUSE COSTS PARALEGAL

A top legal 500 rated firm in Greater Manchester are currently seeking a Costs Paralegal to join their successful team. You will ideally have a minimum of six months experience working within a costs department. However, they will also consider LPC/LLB graduates with an interest in pursuing a career within costs. The firm will offer excellent training as well as the possiblity of a training contract/ACL qualifications further down the line.

MAY/JUNE 2017 | ISSUE 3

03

Editor’s comment

Contents

t is a trite observation to comment on the pace of change in the legal

world, and particularly litigation, but the Civil Procedure Rule Committee’s decision to make the electronic bill of costs

compulsory in the SCCO from 1 October – with other courts to follow – could be a watershed moment. Soon, solicitors will no longer be able to ignore this revolution and Costs Lawyers need to be in prime position to guide them through the transition.

Another watershed might be the Court of Appeal’s ruling on whether an approved budget takes precedence over detailed assessment. And this is all while we wait for Lord Justice

� 04 NewsClarity around success fees and the Supreme Court backs pre-LAPSO recoverability

� 10 Policy and education Kirsty Allison and Claire Green look at competency assessments and reflect on 40 years of the ACL

� 12 ObituaryMurray Heining remembers Bob Tanner

� 13 Public relationsKerry Jack explains the Association’s PR strategy

� 14 ACL opinionMaurice Cheng takes his final bow as chief executive

� 15 APIL opinionBrett Dixon says controlling costs is key

� 16 ConferenceNeil Rose reports from a packed day at the ACL’s Manchester conference

� 20 RecoverabilityCaroline Cousins reflects on a recent Supreme Court judgment

� 22 Expert costs liabilityColm Nugent looks at recovering costs from experts in the QOCS era

� 24 Judicial reviewTom Hickman considers a major problem with judicial review

� 27 CFAsBob Hanlon reports on a significant recent ruling

� 28 Dominic ReganProfessor Regan highlights “the best advertisement for the legal costs profession I can ever recall”

� 29 Case notesSummaries of the latest key rulings

24 Judicial review16 Conference 20 Recoverability

I Jackson’s verdict on the way forward with fixed recoverable costs. The indications are that he is moving away from cases worth £250,000 being the upper limit for his scheme – it is telling that even the Department of Health, despite the financial incentive it has to reduce legal fees in clinical negligence cases, watered down its fixed-fee proposals for such claims to cases worth just £25,000.

The ACL’s Manchester conference highlighted how much there is on Costs Lawyers’ plates even before this. The practice of costs has moved on a great deal from when the Association was first founded 40 years ago, a landmark we will reflect on later in the year.

As in every issue, this Costs Lawyer does its best to reflect that variety.

Neil Rose, Editor

CostsLawyerMAY/JUNE 2017 | ISSUE

Editor Neil [email protected]

ChairmanIain StarkCouncil membersPaul BracewellRobert CookDavid Cooper Steve Davies Francis KendallDavid WrightChief Executive OfficerMaurice ChengAll other enquiries toDiane PattendenHead of [email protected]

Closing date for July/August 2017 issue will be 12 June 2017Visit the ACL website atwww.associationofcostslawyers.co.uk

Costs Lawyer is edited and designed by Archant Dialogue, Prospect House, Rouen Road, Norwich, NR1 1RE. Tel: 01603 664242

Content Production Editor Mike WatersDesigner Nicole MitchellAccount Director Janell VardenStudio Manager Nicky WrightProduction Manager Kay BrownArt Director Rich BerryHead of Content Ryan BattlesHead of Client Services Jason ElkinsPublishing Director Zoë Francis-Cox

Archant Dialogue is part of Archant Community Media

Material submitted for publication is welcomed by the editor. He is, however, unable to guarantee publication in any specific issue and reserves the right to amend or edit any article submitted. All advertisements and contributions are accepted on the understanding that the authors are responsible for opinions expressed and these do not necessarily represent the views of the Association of Costs Lawyers or Archant Dialogue, who do not accept any liability for any error, omission or misstatement by any contributor in any material published. Material in this journal is the property of the Association of Costs Lawyers and cannot be copied without the written permission of the editor. ©Archant Dialogue 2017 Cover image: Jon Parker Lee

04

News

A successful claimant has been docked 50% of her costs because of her solicitors’ conduct during the detailed assessment proceedings, which saw them serve four different versions of their bill.

Jago v Whitbread Group PLC was decided last October but has only recently been distributed by Justin Edwards, an Associate Costs Lawyer at BLM who had conduct of the case for the defendant.

It is a case described by Professor Dominic Regan as “nothing less than the best advertisement for the legal costs profession I can ever recall” (see page 28).

The defendant applied for an order pursuant to CPR 44.11(1) and (2) that the court disallow all or part of the claimant’s entitlement to costs on the grounds of her solicitors’ “improper and/or unreasonable conduct” during the detailed assessment proceedings.

The claimant’s personal injury claim against the defendant, her ex-employers, settled for £51,035. She indicated informally that her costs were £101,677, including a 20% success fee. However, after BLM asked for a copy of the conditional fee agreement, it emerged that the claimant’s solicitors, Davies Solicitors, were not operating under one.

Several months later, the claimant served notice of commencement of detailed assessment with a bill claiming £91,474, including a 25% success fee. Rather than respond to the points of disputes that were then

raised, the claimant instead served a fresh bill of costs for £56,719, which did not include a success fee and also reduced profit costs significantly.

In response, the defendant’s solicitors pointed out the procedural error of serving a new bill as opposed to amending the existing bill. The claimant’s solicitors then filed and served

an amended bill of costs, reduced again to £55,393.

In each iteration of the bill, there was a claim for time spent by a costs draftsman drafting the bill and for work on it by the supervising solicitor. The final two versions of the bill were signed and certificated by a partner on behalf of the claimant’s firm, signing as ‘Davies Solicitors’.

Davies Solicitors submitted that, aside from an increase in the costs incurred during the course of the detailed assessment, the defendant suffered no prejudice.

However, Master Whalan concluded that “the claimant has filed and served, and done so repeatedly, bills that are both inaccurate and mis-certified”. That the second version of the first bill should still claim a success fee was “inexplicable to the point of bizarre” given that the error had been pointed out, he said.

The bills exhibited “repeated errors in claim and calculation”, meaning that not only were they characterised by inaccuracy and mis-certification, but also that the final bill was still undermined, “at least in part, in that way”.

The claimant accepted that her claimant’s solicitors did not “cover themselves in glory” and that the bills were characterised by inaccuracies that were reproduced repeatedly, Master Whalan recorded.

He summarised her mitigation: “Davies Solicitors LLP are a comparatively small high street firm who do not have the financial resources to engage either experienced or competent costs lawyers or draftsmen… Where errors were pointed out, they were acknowledged and the bill was reduced accordingly. This is not a case where dishonesty is either alleged or indeed demonstrated.”

However, the judge said he was “neither impressed nor persuaded” by the claimant’s explanations, including the ability to engage costs lawyers or draftsmen.

“First, in any bill – certainly a bill valued at between £50,000 or

The perils of not using a Costs Lawyer

ISSUE 3 | MAY/JUNE 2017

Successful claimant who “couldn’t afford” specialist advice loses 50% of costs over bill chaos

05

News


05

£100,000 – that facility should be open to any solicitor. The cost of both drafting and checking the bill is included ordinarily and properly in the costs to be assessed and the costs of the detailed assessment are not simply recoverable, but, pursuant to CPR 47.20, ordinarily recovered by the receiving party.

“Second, I see no appreciable difference between the cost of

[a trainee legal executive at the firm] undertaking this task at a charge of £110 an hour and the costs, broadly speaking, of an experienced and competent and costs draftsman engaging in the same process.

“Third, and no doubt in the submission of Mr Dunne more particularly, it is notable in this case that, notwithstanding the explanation that the claimant

could not somehow afford expert costs draftsmen, the costs of costs draftsmen are claimed nonetheless. All four gestations of the statement and bill include a cost for drafting, checking and signing the bill.”

Especially given the importance attached to certifying a bill, he concluded that the claimant’s solicitors were “guilty of conduct that

can be described properly as both improper and/or unreasonable”, and that he had to exercise his discretion to impose two sanctions on the claimant.

The first was that the claimant would only be entitled to recover 50% of her assessed costs. The second was to disallow certain specific items of the claimant’s bill, including the drafting costs.

A claimant whose mother was replaced as his litigation friend by the Official Solicitor during the course of his case is able to recover a success fee for the whole length of the litigation, a costs judge has ruled.

In Mole and Anor v Parkdean Holiday Parks Ltd and Anor [2017] EWHC B10 (Costs), the claimant, who was seven at the time, suffered brain damage in an accident in the swimming pool of a holiday park in south Wales.

A decade later, in 2015,

HH Judge Court QC approved an order for lump sum damages of just over £1.35m and periodical payments commencing at £171,000 per annum. The order provided for the payment of the claimant’s reasonable costs by the defendants.

The claim was originally pursued on instruction from the claimant’s mother as litigation friend under a conditional fee agreement (CFA) with Irwin Mitchell in 2006. The success fee was set at 100%.

Concerns arose as to the mother’s ability to cope with the effects of the claimant’s injuries and in 2013 HH Judge McKenna ordered her removal as litigation friend and replacement with the Official Solicitor. The Official Solicitor signed a document headed ‘Deed of ratification and affirmation’, with the purpose of continuing Irwin Mitchell’s conduct of the claim under the CFA.

There were default provisions such that if there had been no effective ratification or affirmation there was deemed to be a new contract with the solicitors and the success fee was limited to a maximum of 25% of the damages awarded to her, in accordance with the Conditional Fee Agreements Order 2013.

The defendants argued that it was not possible in fact or law for the Official Solicitor to ratify or affirm the CFA entered by the claimant’s mother, and that the effect of the deed was that the Official Solicitor entered a new CFA.

Master Brown ruled that the analysis in the Court of Appeal’s 2015 ruling in Blankley – where it was held that the client’s loss of mental capacity in the course of

proceedings did not automatically terminate their solicitor’s retainer – was clear. “It leads to the conclusion that the retainer that was first entered into in 2006 has remained effective during the course of the claim unaffected by the substitution of a new litigation friend.

“Accordingly, the claim for costs in the period after the appointment of the Official Solicitor is not dependent upon the Official Solicitor having entered into a new agreement on 1 April 2013 or indeed founded upon any such agreement. There was already in existence an agreement which was sufficient to ground the liability of the claimant to pay the success fee under the original CFA for the period after the appointment of the Official Solicitor.”

Master Brown also observed that, if the defendants were correct, the Official Solicitor would be liable for the success fees and would be required, potentially, to pass this liability on to the claimant. This would be “a matter of potentially very significant and serious prejudice”. By contrast, the outcome of his ruling “avoids what seems to be in the nature of a windfall”.

Claimant can recover success fee after litigation friend swap

News06


Supreme Court backs pre-LASPO recoverability

Challenges by three leading newspaper publishers to the pre-LASPO recoverability regime failed in the Supreme Court in April.

The court held that the claimants had a legitimate expectation under the Access to Justice Act 1999 that they would be able to recover additional liabilities at the time they entered into conditional fee agreements (CFAs).

The court was asked to resolve the tension between earlier rulings of the House of Lords and the European Court of Human Rights (ECtHR) on whether success fees and after-the-event insurance (ATE) premiums should be recoverable in publications proceedings. The House of Lords in 2005 said they should be, but the ECtHR said in 2011 they usually should not be because they breached the article 10 right to freedom of expression.

However, in the three conjoined cases of Times Newspapers Ltd and Ors v Flood and Ors [2017]

UKSC 33, the Supreme Court – with president Lord Neuberger giving the unanimous ruling – held that the claimants’ rights under article 1 of the first protocol to the European Convention on Human Rights were more important.

Lord Neuberger said: “It is a fundamental principle of any civilised system of government that citizens are entitled to act on the assumption that the law is as set out in legislation (especially when its lawfulness has been confirmed by the highest court in the land), secure in the further assumption that the law will not be changed retroactively – i.e. in such a way as to undo retrospectively the law upon which they committed themselves.”

While the ruling suggested that it was hard to impugn the European court’s decision, the Supreme Court said it was “very difficult” to see how Mr Miller’s claim under article 1 “could be defeated”.

Lord Neuberger said: “Parliament did not see fit to

render the LASPO regime retrospective: on the contrary, as explained above, the 1999 Act regime applies to all proceedings begun before 1 April 2013.

“Parliament thereby correctly recognised that, while the 1999 Act regime was unsatisfactory, it would be wrong to disapply it to proceedings which had been issued in the expectation that that regime would continue to apply to those proceedings.”

Lord Neuberger said that to refuse Mr Miller his costs would directly infringe on the fundamental right not to be deprived of his accrued rights and his legitimate expectations.

“While freedom of expression is, of course, another fundamental principle, it is not so centrally engaged by the issue in this case: the decision in MGN v UK is essentially based on the indirect, chilling, effect on freedom of expression of a very substantial costs order.”

As a result, Lord Neuberger declined to reach a definitive conclusion on whether the ECtHr ruling was part of domestic law.

The claimants’ argument in one of the cases, Frost v MGN, was weaker because the claimants – who were victims of phone hacking – all entered into CFAs and took out ATE insurance after publication of the ECtHr ruling.

But Lord Neuberger still reached the same conclusion – despite that ruling, the pre-LASPO regime was still in force and lawful in domestic terms. Further, he continued, a “more fundamental” reason to reject MGN’s appeal was the ECtHR ruling could not be properly invoked in a case involving “the persistence, pervasiveness and flagrancy of the hacking and blagging”.

ACL vice-chairman Francis Kendall commented: “The nature of the ruling means that the issue has not been fully determined, but it has clearly shut the door to the argument in circumstances where there is illegal conduct involved (phone hacking/blagging etc). This should apply to all such cases. It may be unsurprising, with hindsight, that the Supreme Court did not find favour in an argument based on the freedom of expression to publish illegally obtained material.

“In respect of other privacy/defamation cases, it appears that, despite this ruling, the lower courts will still be bound by the Campbell v MGN House of Lords ruling that additional liabilities do not breach the article 10 right, until there is an appeal to the Supreme Court at which the government is represented. The government may find this an unwelcome distraction at this time.”

Costs Lawyer Andy Ellis, managing director of Practico, added: “The decision represents a series of snookers that trap media defendants against the cushion. The only crumb of comfort is the emphasis given in paragraph 9 to ‘the new provisions which limit the level of overall costs to what is proportionate (pursuant to CPR 44.3(2)(a))’.

“This reference only makes sense if the amount of additional liabilities are up for grabs in the post-LASPO ‘stand back’ proportionality test. All eyes will now be on the BNM v MGN and May v Wavell appeals later this year, when it will be harder for claimants to argue that their blanket immunity from the Jackson reforms should continue.”

Clients were entitled to rely on the law as it was at time

News


07

Drafting cap to apply to incurred and budgeted costsThe CPR are to be amended to clarify that the percentage cap allowed for the costs of the budgeting process refers to both incurred and budgeted costs, the Civil Procedure Rule Committee has decided.

Minutes from its February meeting, released in April, show that it preferred this approach to one that just took account of budgeted costs.

CPR 3 PD E 7.2 provides that, save in exceptional circumstances, the recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000 or 1% of the approved or agreed budget; and all other recoverable costs of the budgeting and costs management process shall not exceed 2% of the approved or agreed budget.

In a report to the CPRC, Master Richard Roberts, chairman of its Sarpd sub-committee, said that, following the uncoupling of incurred costs and budgeted costs, the question arose whether the approved or agreed budget referred to both incurred and

budgeted costs or only to budgeted costs.

Its unanimous view was that paragraph 7.2 needed to be amended to settle this, but it did not express a preference.

Laying out the arguments for each approach, it said in favour of the wider definition: “Whether costs are incurred or budgeted is determined by how long the parties have to wait for the court to hear a costs case management conference (CCMC), which is outside the control of both parties. To apply the percentage cap to ‘budgeted costs’ only leaves the parties open to the vagaries of when they are costs managed. In the RCJ, parties often have to wait four to five months from filing allocation questionnaires for a CCMC.

“It may also make parties reluctant to progress the case before the first costs case management conference, leading to delay, although it is often suggested that the lack of budgeting of incurred

costs provides the opposite incentive to progress a case as far as possible before costs management.”

Further, the costs recovered should be proportionate to all of the costs incurred throughout the case, not only those incurred after the first CCMC.

The report continued: “Both parties’ costs draftsmen will have spent time on collating data on incurred costs and inserting this data in the correct phase of Precedent H, and will continue to do so during the course of the case. Why should the costs draftsmen’s costs of

dealing with incurred costs not be recoverable?

“In many cases, if the claimant is not allowed to recover up to 1% and 2% of the incurred costs as well, the costs draftsman’s costs will exceed the 1% and 2% of budgeted costs which are allowed. The excess will be deducted by the claimant’s solicitors from the claimant’s damages, which is unjust. The claimant already has to pay success fees out of damages. The more economically unviable claims become, the less access to justice there will be.”

It is not clear when the change will come into force.

Judge criticises party that put very low figures in Precedent RCut out the budgeting “games”, warns High Court

Parties should not treat costs budgeting “as a form of game”, a High Court judge has warned, highlighting “the critical need to ensure that the Precedent R process is carefully and properly adhered to”.

Mr Justice Coulson said a party who had done just that was guilty of “an abuse of the cost budgeting process”.

In Findcharm Ltd v Churchill Group Ltd [2017] EWHC 1108 (TCC), he said the introduction of Precedent R, which requires each party to comment on the cost budget of the other, has

led to a “great saving” of judicial time “because it has obliged the parties to adopt a realistic attitude to the budget of the other side and has assisted in the identification of the real disputes between the parties on costs”.

But he continued: “However, even now, some parties seem to treat cost budgeting as a form of game in which they can seek to exploit the cost budgeting rules in the hope of obtaining a tactical advantage over the other side.

“In extreme cases, this can lead one side to offer very low

figures in their Precedent R in the hope that the court may be tempted to calculate its own amount somewhere between the wildly different sets of figures put forward by the parties. Unhappily, this case is, in my view, an example of that approach.”

The case involves an £820,000 claim by Findcharm, which operates a restaurant within the Churchill Hotel in London, over a four-month closure that followed a gas explosion.

Coulson J recorded: “In contrast to Findcharm’s detailed pleaded claim, Churchill’s defence could

not be more basic. It is a combination of bare denials and non-admissions of the kind that the Civil Procedure Rules was designed to sweep away.

“It is, bluntly, an insurer’s defence straight out of the 1970s. For example, despite the fact that the explosion happened in its hotel, Churchill does not even formally admit the cause of that explosion.”

Findcharm’s budget was £245,000; through its Precedent R, Churchill offered less than £90,000. The judge was critical of Churchill’s solicitors, Kennedys.

Solicitors do not like costs management but consider it the lesser of two evils given the prospect of more fixed recoverable costs, a survey by Just Costs Solicitors has found.

In a poll of 146 personal injury (PI) solicitors and 155 commercial litigators from the UK’s top 200 firms, Just Costs also found the former far more likely to outsource their costs work than the latter.

The survey found that 65% of PI solicitors and 60% of commercial litigators thought that costs management had had a negative impact on litigation, with commercial litigators complaining about the lack of consistency among judges.

The survey said: “The introduction of cost management process has only increased the cost of litigation in some litigators’ eyes. The need to comply with deadlines, or having to apply for an extension before the deadline expires, is seen as an accumulation to the cost of

litigation, especially when the principal claim remains their main focus of litigation.

“The fact that given the process is coming up to its fourth year and only 17% say it has had a positive impact and 23% remain neutral, still questions if the fundamental procedure is working.”

The views were similar among PI lawyers, with just 10% saying costs management has had a positive impact.

But despite this, 90% of personal injury solicitors and 78% of commercial litigators preferred costs management to fixed recoverable costs.

The PI survey added: “There is also a possibility that legally complex cases, though low in value, will require an extensive amount of work to obtain a successful conclusion [that is more than] the allocated cost band would allow. This could ultimately result in litigators not taking on such complicated low-value cases, preventing

legitimate claims from being pursued.”

But 57% of commercial litigators believed their clients would prefer fixed recoverable costs, although only 33% of PI lawyers thought the same.

Phil Bradbury, head of costs management at Just Costs, said: “Lawyers are trapped in a marriage of convenience with the costs management process. There’s no love or affection for the process, but it’s better the devil you know and they won’t be filing for divorce any time soon.”

The survey found that commercial litigators far more likely to complete Precedent H in-house (63%) – usually the fee-earner with conduct of the case – while 70% of PI lawyers outsourced the work to costs specialists.

The survey also highlighted frustrations with the Excel- format Precedent H, highlighting deleted formulas/reformatting and limited contingents as the biggest problems.

News08


ClarificationThe article on the Tui case that was published in the January/February issue of Costs Lawyer magazine under the name of Kate Newberry should also have acknowledged the contribution of Richie Young to its writing.

Kain Knight heads northLeading costs firm Kain Knight has opened an office in Manchester, its first beyond the south of England, following the recruitment of Costs Lawyer Nick McDonnell from Just Costs Solicitors, where he was legal services director and northern regional manager.

He has become a director of Kain Knight (North and Midlands) Ltd, the newest part of the Kain Knight group.

Matthew Kain, managing director of Kain Knight said: “We see a great deal of potential in the north and the Midlands and will continue to make significant investment in human resources, technology, marketing and business development to establish our business in that region.”

Hires and promotionsGlenn Newberry, former ACL Council member and editor of this magazine, has been promoted to legal director status by leading global firm Eversheds Sutherland.

Amanda Johnston, a Trainee Costs Lawyer in her final year, has moved from Aestima Law Costs Consultants to Bidwell Henderson, the costs firm that operates with self-employed consultants. Bidwell Henderson now has a team of 26 costs specialists and its expansion plans include buying its own head office in Alfreton, Derbyshire.

For regular news updates…visit the Association of Costs Lawyers’ website at www.costslawyers.co.uk

Costs management better than fixed costs, say solicitorsSurvey also finds PI lawyers more likely to outsource costs work

He said: “In my view, Churchill’s Precedent R is of no utility. It is completely unrealistic. It is designed to put as low a figure as possible on every stage of the process, without justification, in the hope that the court’s subsequent assessment will also be low. In my view, therefore, it is an abuse of the cost budgeting process.”

Among the examples of “the lack of reality” in Churchill’s Precedent R were its offer of £5,300 for Findcharm to prepare three witness statements and consider

Churchill’s two; Findcharm’s estimate was £40,235.

“[Churchill’s figure] is simply incredible in a case where, not only does the background and circumstances of the explosion need to be explained, but also where a large claim for loss of profits will need to be underpinned by detailed factual evidence.”

As a result, the judge said he was “obliged” to disregard Churchill’s Precedent R and considered Findcharm’s budget to be both proportionate and reasonable.

Churchill’s own budget was

just under £80,000. “Even on Churchill’s own case, it seems erroneous on its face,” Coulson J said. “For example, it allows nothing at all for fire experts, even though at the CMC Churchill were arguing that causation was in issue and an expert was necessary. It also purports to estimate a sum of less than £7,000 for the preparation of a High Court trial. It is, therefore, on any view, an unrealistically low budget.”

However, Findcharm had, “not unreasonably”, agreed the Churchill’s budget and so Coulson J approved it.

Continued from page 7

News


09

There are signs that Lord Justice Jackson is moving away from extending fixed recoverable costs to cases worth up to £250,000.

Speaking at May’s ACL conference in Manchester (see p16), Professor Dominic Regan said it has become clear that Jackson LJ “has abandoned fixed costs up to £250,000 or anywhere near that figure”.

This was backed up by the Law Society. In his report to May’s Law Society council meeting, interim chief executive Paul Tennant said: “We anticipate that the final recommendations will move away from the initial suggestion of fixing costs for all claims up to £250,000, although we await clarity on the final figure.

“The report to the Lord Chief Justice and the Master of Rolls must be published by 31 July 2017, although this deadline may be altered in light of the General Election.”

Jackson LJ gave little away in the keynote address he delivered to the Association of Personal Injury Lawyers’ annual conference, also in May, but did acknowledge the specific difficulty of trying to fix costs for clinical negligence cases worth more than £25,000 except in matters where liability and causation have been agreed.

He also seemed to accept the argument that costs cannot be fixed if the procedure is not as well.

Jackson “backing off” £250,000 fixed costs threshold

Costs Lawyers and their clients need to get to grips with the electronic bill of costs quickly after the Civil Procedure Rule Committee decided that it will become compulsory in the Senior Courts Costs Office (SCCO) from October, the ACL has warned.

At its meeting in May, the committee approved the new bill for detailed assessments and, subject to ministerial approval, its use will become mandatory in the SCCO from 1 October 2017.

The committee is meeting with HM Courts and Tribunals Service to discuss implementation of the new bill in courts other than the SCCO and will report back at its next meeting. The changes to the CPR will be included in the next scheduled update in July.

There was virtually no take-up of the original electronic bill, Precedent AA, after a voluntary pilot began in the SCCO in October 2015 following work

done by the Hutton committee. In October 2016, the rule committee made amendments to the bill being used in the pilot, issuing Precedent AB, allowing users to create their own versions so long as they include certain levels of information.

But the roll-out is happening in October even though the SCCO has not dealt with a single electronic bill (although three have been filed) since last year.

It seems likely that only costs incurred after that date will have to be in the new format, and ACL vice-chairman Francis Kendall says time is short for solicitors to understand what is required.

“With such a focus on modernising civil justice, some form of electronic bill of costs is inevitable. Done properly, it can offer significant benefits to parties, judges and lawyers alike. It is obviously a concern that the pilot did not deliver any data, and

it may be that – as Lord Justice Jackson himself said last year – making it compulsory is the only way to change practice.

“But it also means that, initially, everyone will be flying in the dark to some extent and there are bound to be teething problems. It is vital in particular that sufficient time is put aside for judicial training.”

Over the past year, the ACL has been working hard on its own, more workable version of the Excel-based bill that is intentionally far less rigid than Precedent AB.

Mr Kendall added: “The new bill also represents a significant change for the costs profession, but we have been using our expertise to build a useable bill that will smooth the transition from paper bills. But there is no getting away from the fact that this represents a major change in the way litigators operate.”

Electronic bill to become compulsory at SCCO on 1 October

Policy10


Unlocking potentialFollowing the SRA unveiling new pathways to qualify as a solicitor and the CLSB’s consultation on training, Kirsty Allison looks at why competency assessments are key

A s the recent Costs Lawyer Standards Board (CLSB) consultation on training and CPD drew to a close,

the Solicitors Regulation Authority (SRA) announced that the solicitors qualifying examination (SQE) will go ahead and replace the current system for entry to the profession as early as September 2020.

Back in 2013, the Legal Education and Training Review – a joint project of the SRA, the Bar Standards Board and what is now CILEx Regulation – identified a need to modernise our education and training framework to ensure barriers of entry were eliminated and mobility into the profession, and between branches of the profession, were facilitated.

In short, the review and additional research has recommended a move from the traditional education and assessment strategies to a competence-based approach.

Providing clarityCompetency assessments are based on the actual skills, knowledge and judgement that a person needs to demonstrate in the workplace to undertake their role. This recommended transition is complicated by the continually evolving legal services landscape.

A competence approach can, however, ensure change in market requirements can be managed. Measuring competency would allow for assessments to identify gaps that may exist between the current skill-set of legal professionals and the current and future needs of the profession.

As a means of providing the foundation for tackling the recommendations, the SRA introduced a competence statement on 1 April 2015. This describes the ability to perform the roles and tasks required by a solicitor to the expected standard.

The statement provides clarity about what it means in practice to be a competent solicitor, along with the ability for individuals to reflect on

Kirsty Allison is the ACL’s head of training

their own continuing professional development and be clear about what is required by their regulator. The SRA has since moved on to consider how best to assess against the competence statement and what pathways to qualification might be appropriate.

Blazing a trailThe first new pathway to qualification, the Trailblazer Solicitor Apprenticeship, was approved by the Department of Business, Innovation and Skills in autumn 2015. It is called a trailblazer apprenticeship because it was developed by an employer panel as part of a government programme to reform and improve apprenticeships. The solicitor apprenticeship is at Level 7, which is a post-graduate level and which means that it will normally take five to six years to complete. The standards correspond to the competences set out in the SRA’s competence statement and the assessment plan requires that all apprentices demonstrate the competences set out in that statement.

The most recent pathway to qualification to be announced by the SRA is the SQE. To qualify as a solicitor under the new system, candidates will need to: 1. Pass SQE stages 1 (comprising six

functioning legal knowledge assessments) and 2 (comprising two sets of five practical legal skills assessments);

2. Have a degree or equivalent qualification, or have gained equivalent experience;

3. Have completed at least two years of qualifying work experience; and

4. Be of satisfactory character and suitability.

Key to successLike solicitors, Costs Lawyers work in increasingly diverse business models within a range of legal specialisms and with a varied consumer base. Similar to the approach taken by the SRA, the CLSB has articulated the threshold standard for graduates of the Costs Lawyer qualification in one statement:

“A competent trainee, having completed the Costs Lawyer qualification and three years of work-based learning, will have a good working and background knowledge of costs law and practice, will be able to work independently to draft documentation and conduct advocacy that is fit for purpose and will be able to cope with complex situations through deliberate analysis and planning. This level of performance will be evidenced through assignments, examination and supervised practice.”

A statement describing levels of achievement over the threshold standard (e.g. merit and distinction) has also been made explicit.

The work that the CLSB has undertaken led to the recent consultation on an accelerated qualification – the Costs Lawyers competence test. This is an attempt by the CLSB to remove some of the barriers to entry for those who have significant experience in costs law and practice where those individuals can evidence knowledge and skills to the expected standard. We await the outcome of the consultation.

There is no doubt that the work on appropriate pathways to qualification will continue across the legal professions, including for Costs Lawyers, and that efforts will also be made to strengthen the evaluation and assessment of competencies.

As this work is undertaken, the employers of Costs Lawyers should ensure that the skills and knowledge required in the workplace are captured and reflected within their internal processes.

Competency assessments are designed to help both individual learners and employers. Ultimately, a business’s ability to identify the core competencies needed from its employees and to ensure they inform the company’s recruitment, training and appraisal programmes will be key to their financial success and reputation in the profession. �

Education


11

This year, the ACL celebrates its 40th year and it is a year that will see Costs Lawyers achieve a standing among

our fellow legal professionals that has been unprecedented until now. As you may have read in the eBulletin, the ACL received an invitation to members to put themselves forward for the post of senior costs officer at the Senior Courts Costs Office. I wonder how many of our founders envisaged this as a milestone we would achieve when they met for the first time in 1977?

What is certain is that we would have been nowhere as an Association without their initiative and hard work over the early years. We owe them and the others who have followed who are too numerous to mention individually a huge debt of gratitude for their dedication and determination in making ours a branch of the legal profession which is recognised for its expertise and professionalism.

We are delighted with the development and look forward to welcoming the first ever Costs Lawyer to the costs officer role.

Civil justice post-BrexitThe date for this government-organised summit has still not been released and will continue to be monitored. The ACL will strive to be represented.

New bill format working partySince my last update, the small technical team has been very active. We have taken the feedback from members, actioned what was actionable and responded to all members

Happy memoriesPolicy officer Claire Green reflects on 40 years of the ACL and highlights the activity of various ACL working parties

who took the time to provide feedback. It is re-affirmed each time the group meet that our remit is to lobby for flexibility within the practice direction, as opposed to producing a bill to rival that of the Hutton committee.

The team has been extended to include Costs Lawyer Tom Winyard, whose feedback was such as to make his inclusion on the team a positive development. In addition, Ian Lees of Acumension has provided input via Ken Corness, which has been invaluable.

The team has now completed a final version of the bill with all identified glitches ironed out and improvements made. We have completed the guidance document and are pleased to report that Lord Justice Birss, who is chairing the working party which is due to report to the Civil Procedure Rule Committee, agreed to meet and listen to our representations in respect of maintaining flexibility in terms of the format of the bill and the ACL bill itself.

Fixed recoverable costsThe consultation response was filed and the group continued to discuss the issue of data collation. There were some questions raised in Council about the exercise, with concerns expressed about the source, nature and quality of what we could produce. The group had devised a spreadsheet which we felt was able to cover the data required.

We were then able to contact Lord Justice Jackson, who expressed his desire to see any data we could compile. He directed us to Professor Paul Fenn, who in turn considered and amended our spreadsheet. We provided what we could, and the spreadsheet was also sent to

the Law Society to send it out to its members.The group has also worked on a response to the Department of Health consultation into fixed fees in clinical negligence.

Prison and Courts BillWe were preparing to consider what the bill – which included changes to the courts and tribunals, and reform of lower-value personal injury claims – meant for the profession when the General Election was called. As a result, there was not enough time to get the bill through Parliament and so it fell. However, it is perfectly possible that the bill will be resurrected by the Conservatives if they are returned on 8 June, so we will keep a watching brief.

Legal aidThe working party set up by the Law Society, Bar Council and Chartered Institute of Legal Executives has appointed an economist to assist in considering the viability of a contingent legal aid fund.

Informally, Paul Seddon and I have been asked to consider the viability of such a fund, its operation and funding. We have spent some time producing a discussion paper which is now in its final stage. If there is any member who would like to input into the document, we would be pleased to hear from you.

There were two other consultations which the ACL’s Legal Aid Group felt that we as an organisation should be involved in – the consultation on reforming the advocates’ graduated fee scheme and the Ministry of Justice’s review of LASPO – although the timetable for this has still not been set. �

Claire Green

Obituary12


In memory: Bob TannerRobert Tanner, a former council member, chief executive and education development officer of the Association of Law Costs Draftsmen died on Sunday 23 April 2017 after a period of illness.

Bob was born in July 1939 and was brought up in London, where he first worked in general litigation for a firm of solicitors. He qualified as a Fellow of the Institute of Legal Executives in 1979.

Like many in this area of work, he developed an interest in costs law and practice and progressively built up his own general costs practice, having moved to Canterbury. Bob became a Fellow of the Association of Law Costs Draftsmen (ALCD) while it was in its infancy, and he was soon a regular contributor to the Association’s newsletter.

Successful visionBob believed in the need for regulation and for the role of the regulated costs draftsman to be properly recognised. He became a Council member in March 1996 and immediately devoted himself to developing the education of students and ensuring that it was acknowledged as being credible.

By 1997, Bob had become the chairman of the education committee of the ALCD. He inspired other Council members and Fellows to work with him in developing the ALCD training course. When compulsory CPD

was introduced, Bob both organised and delivered seminars around the whole country.

The experience he gained from these seminars, and the realisation that the standing of the ALCD could be raised, led him to argue for a two-day national conference to replace the one day seminar/annual general meeting. His proposal was not without opposition, but Bob prevailed. That was some 15 years ago and few would dispute the success of his vision since then.

Bob was never idle in working for the ALCD. When a new editor of the ALCD Journal was needed, Bob stepped in during 2004 and 2005. As the ALCD grew and it became accepted as the body representing the costs profession, it was no longer feasible for the education, training and executive functions to be delivered wholly by volunteers. The council appointed Bob as the first chief executive officer of the ALCD in 2005 and then as the first education officer.

In these roles, Bob was integral in the application of the ALCD for rights of advocacy and the rights to conduct costs litigation being successful.

Drive and enthusiasmBob had enormous drive and enthusiasm in his work for the ALCD. He was a source of inspiration to fellow Council

members, student members and, of course, members generally – whom he always found time to assist. A call asking if he had time to answer a query was rarely, if ever, denied.

Bob had a tremendous sense of humour coupled with a dislike of bureaucracy. Older ACL members will fondly recall his monthly column in the ALCD Journal, ‘Tanner’s Tantrums’, where more often than not one or more branches of government or government agencies concerned with the administration of justice would be subject of his ire. The

Legal Services Commission was a particularly favourite subject. In one column, he posed and answered his own question: “Who is this Victor Meldrew lookalike? Bob Tanner, Fellow from Canterbury.”

It is difficult to adequately express the full extent of Bob’s contribution to the Association. He was a major reason why the Association has achieved the status that it has. We as Costs Lawyers owe Bob much, and he will be sorely missed. We extend our sincere sympathies to Diana, his wife, and his family. �

Murray Heining remembers the career and achievements of Costs Lawyer Bob Tanner, who played a major role in the Association for many years

Public relations


13

In the public eye

Kerry Jack explains the Association’s PR strategy

The Association of Costs Lawyers appointed Black Letter Communications (BLC) in

October 2011. The brief was three-fold: raise the ACL’s profile among the legal profession, position the ACL as a voice of authority and represent members’ views to key stakeholders.

Given the pre-LASPO timing and the coming introduction of costs budgeting, it was essential that a voice was found for the ACL and its members not just in the media but also at a policy-making level.

One of our early tasks was to use our network to make introductions; as a result, we ensured that the ACL was invited to the series of ‘big tent’ industry gatherings being held by the Civil Justice Council, which later turned into a seat on its costs sub-committee.

Today, chairman Iain Stark has been appointed one of Lord Justice Jackson’s 14 costs assessors in his fixed recoverable costs review, which should ensure that Costs Lawyers’ voices are heard loud and clear in designing a system that is fair and workable.

Increasing face-to-face contact with judicial stakeholders has been an important facet of the PR strategy. Securing the Master of the Rolls to speak at the annual conference in 2012 proved to be a resounding success, not just for conference delegates, but for the widespread national media coverage that ensued.

Table settingsA series of roundtables saw us bring together members of the judiciary including Mr Justice Ramsey, the judge then in charge of Jackson implementation, Mr Justice Warby, His Honour Judge Simon Brown QC, the then Senior Costs Judge Peter Hurst and his successor Andrew Gordon-Saker, Costs Judge Rowley and Alex Hutton QC, chairman of the committee on the J-Codes and new bill of costs. The first led to the release of ACL’s first-ever White Paper, marking the first year of costs budgeting, which was delivered to all members of the costs judiciary and other stakeholders, ensuring that ACL’s voice and that of its members was heard.

Alongside this, we set about ensuring that the ACL was the first to comment on any costs-related developments, a practice that continues to this day and has seen the ACL become the ‘go-to’ source for all things costs. Particular highlights have been the ACL’s first-ever front page news story in the Law Society Gazette about judicial training and commentary in both the Financial Times and the Guardian.

Today, we have regular columns drafted by Council members in New Law Journal, Solicitors Journal and Thomson Reuters’ Dispute Resolution Blog, ensuring the ACL’s costs-expertise is showcased across the profession. We also write for The Times, Law Society Gazette, PI Focus and Litigation Funding on current costs matters.

Raising standardsThe ACL achieves in excess of 80 media mentions a year. The most popular news story by far among the media is the results of the members’ survey, which is administered twice-yearly at the London and Manchester conferences and which is also available online. We will be running the survey again at the Manchester conference in May and the London conference in October this year, and look forward to once more representing your views across the profession.

In late 2015, we also took on the running of the Costs Lawyer magazine and eBulletin alongside the PR activity, which has worked well in terms of identifying stories for PR. Supported by Archant Dialogue as publishers of the magazine and eBulletin, we believe that the standard of both has increased, with the magazine benefiting from BLC consultant and well-known legal journalist Neil Rose’s understanding of the area, alongside more effort to encourage members to write. Through opinion columns, the SCCO update and interviews such as the one last year with Master Gordon-Saker, the magazine also contributes to the wider efforts to strengthen relationships with key stakeholders.

We very much welcome contributions from members to the magazine, so please email [email protected] with any suggestions.

ACL vice-chairman Francis Kendall chairs the PR and marketing committee, which we report into, and we submit monthly reports to Council detailing all of our activity. Our focus in 2017 is to continue to raise the profile and showcase the expertise of Costs Lawyers as your representative body and to lobby heavily against threats to the profession, in particular around fixed recoverable costs. �

Kerry Jack is chief executive of Black Letter Communications, the ACL’s PR advisers

14


Opinion

It’s been a rollercoaster three-year tenure as chief executive of the Association of Costs Lawyers. Many of you whom I have

had the pleasure to meet may remember me recounting a barrister friend of mine saying “Costs Lawyers? It’s where the real action is – get in there, Cheng!” as the spur to apply for the role in 2013. She was right.

Valued contributorI am proud to have been part of the movement that saw the Association become more and more respected as a valued contributor in consultations with the judiciary, the regulators and Ministry of Justice around developments in the legal market.

I am pleased that costs budgeting is now (mostly) well-established and signposts the underlying and very real value of the qualified and regulated Costs Lawyer in understanding and helping to manage the cost of law.

The work that the ACL and ACL Training have undertaken with the CLSB has led to consultations on accelerated qualifications and recognition of prior learning and experience, which may well set Costs Lawyer education at the leading edge of legal training.

The challenges that the ACL Council recognised and built into the strategic plan in 2014 are there, of course, and will continue to be key factors in shaping our response to the future of the profession. Change of regulatory structures, automation of traditional costs functions and legislative changes around fixed costs thresholds are all substantive factors to be faced and worked with.

But I continue to believe that the core value of the Costs Lawyer profession is not just how to put a bill together, but actually in the years of experience of what the most reasonable and likely costs of any legal process is – something that, as we know, fee-earners tend not to be terribly interested in, particularly given the labyrinthine complexities of costing and case management.

It is exactly the same type of evolutionary challenge that accountants and personnel managers faced in the last century. Now, they are information specialists who focus on business improvement and ‘futurecasting’ and ‘talent’ managers that support and steer the human resources of an organisation respectively.

Collective strengthSo what is the Costs Lawyer of the future? What is the future role of the Costs Lawyer profession that takes what the skill set is, builds in the experience base that we all

Many of you whom I had the pleasure to meet may remember me recounting a barrister friend of mine saying “Costs Lawyers? It’s where the real action is – get in there, Cheng!” as the spur to apply for the role in 2013. She was right

Farewell, friends

develop and is self-evidently what the legal market needs? Legal project management perhaps? Answers on a postcard, please.

But it’s not just answers that we need; it’s the determination to work together to make it happen. We have two highly experienced and determined executive directors in Diane Pattenden (for ACL) and Kirsty Allison (for ACLT). Iain Stark has come back in as ACL chair, having steered the whole profession into regulation, and the new chair of ACLT, Carl Lygo, has incredible experience in professional education and the deployment of educational programmes to support

professional growth. But we still need the membership, and the employers of the membership who benefit from the good standing of the profession, to come together, to debate, support and push, to make this profession all that it can be. I am very grateful to have shared your evolutionary journey – your bright future is in your collective hands. �

Maurice Cheng is bowing out after three years as the ACL’s chief executive. He reflects on what has been achieved and where the profession is going

Opinion


15

Access to justice will always be necessary as long as people are being injured negligently. For this

to happen, injured people must have access to expert specialist advice and this is a key principle of APIL’s work.

APIL champions a fair justice system and provides a voice for injured people in the face of sweeping and fundamental reforms. There is a danger sometimes that an injured person could be hit twice – once by negligence and again by a system which asks too much of them and does not give enough.

I am stepping into the role of president at a time when several key issues are under discussion for injured people and their representatives, particularly in relation to the cost of justice.

Diverse and complexIn July, Sir Rupert Jackson will publish his report on fixing recoverable costs and will provide bespoke recommendations on all areas of law. APIL has stressed to Sir Rupert that there is more to the right level of costs than simply the sums at stake. It is essential to consider the work involved in conducting litigation.

We all know that personal injury work is both diverse and complex. No two cases are the same. Those pushing the case for an increase in the small claims limit, for example, ignore the

Brett Dixon, the new president of the Association of Personal Injury Lawyers, argues that controlling costs – rather than limiting them – should be the focus of the reform agenda

fact that settling an injury claim too quickly, with barriers to expert specialist advice, will almost certainly lead to a shortfall in damages for injured claimants.

From small claims to multi-track claims, pursuing redress for an injury is never like it is for a contractual quarrel, where there is usually a linear relationship between the value of the item in dispute and the value of the remedy. In personal injury, the cost of proving the injury and the causation is far more complicated than proving that a fridge was never delivered or that someone owes a parking fine.

Human beings are complex and putting right the damage negligently done to them is just as complex. This is another point we have repeatedly highlighted to Sir Rupert, the government, the justice select committee and others in our work battling against a drive to make justice cheaper for wrongdoers.

Complexities become even more apparent once we look at cases beyond the fast-track in terms of value. The case for fixing costs in the multi-track remains unclear at this point. The lessons learned from fixing costs in the fast-track are still yet to be evaluated.

Criminal classControlling costs rather than limiting them should be the focus, in APIL’s view. APIL has been working with the Forum of Insurance Lawyers and a number of key insurers over

the last 10 years to put a process in place for dealing with higher-value cases that encourages collaboration, resulting in continued liaison, case planning and the narrowing of issues in dispute.

The result of this joint work is the Serious Injury Guide. Cost budgeting recognised that costs is not a ‘one size fits all’ model and the Serious Injury Guide tackles poor behaviour and in turn controls cost. While the initial scope for this best practice guide was set for cases valued at more than £250,000, there is no reason why this cannot be extended to the lower reaches of the multi-track.

At the time of writing, APIL is preparing its response to the Department of Health’s consultation on fixing costs in clinical negligence claims. It is noteworthy that the department seeks to advance its own cause, as wrongdoer, changing the way in which the injured person can succeed and the costs they can recover in a way that would not be acceptable in any other area of the law. It is akin to a criminal defendant attempting to change the sentences which can be imposed for the crimes he or she has committed.

Injured people must remain at the heart of the personal injury litigation process. Meanwhile, behaviour still needs to be fixed. If defendant behaviour continues to run up costs and cause delay, how can claimants function effectively in a fixed cost environment? �

Taking control

Conference16


Million-wordNeil Rose reports from the ACL’s Manchester conference at the end of May, where the complexity of costs law was under the microscope

question

Jamie Carpenter outlines his views on budgeting

Conference


17

If you had to read a million words, would you go for all seven books of the Harry Potter series, which come in at 1,084,170?

Or maybe go through the 587,287 words of War and Peace a couple of times to make sure you understood it? The Bible, both Old and New Testaments, would only take you three-quarters of the way.

But the perfect choice for Costs Lawyers is, without doubt, the next edition of Friston on Costs, because that, according to the eponymous author Dr Mark Friston, is how long his tome will be.

Speaking at the ACL’s Manchester conference, the barrister from Kings Chambers used this fact to illustrate his argument that “costs are getting absurdly complex”.

In particular, he said: “I’m concerned that costs are becoming a specialism where people are giving weight to first-instance decisions or appeals to circuit judges. People are forgetting that we operate on a system of precedential law.”

He spoke out after the closing panel he was sitting on was asked about whether indemnity costs were payable on top of fixed costs where a part 36 offer was accepted out of time, with a ruling by fellow panel member District Judge Ian Besford currently on appeal to HHJ Gosnell in Leeds.

It had been long established in the senior courts, Dr Friston pointed out, that a party which accepted a part 36 offer out of time was

not penalised by indemnity costs purely because of the lateness.

Prudent lawyeringThe conference certainly identified plenty of complexities in costs law, with Jamie Carpenter of Hailsham Chambers kicking off the day with a consideration of costs budgeting.

Questioning whether budgeting had delivered the promised benefits of increased certainty and lower costs, he highlighted various problem areas, including the changes to the CPR in April to deal with the impact of Sarpd Oil, which he suggested may not have done the job.

“Although CPR 3.18(b) refers only to budgeted (i.e. estimated future) costs, that was always the case, though it has now been made clearer. Sarpd Oil applied CPR 3.18(b) by analogy to incurred costs.

“The new rules make express provision in CPR 3.15(2)(c) and PD3E para 7.3 for incurred costs to be agreed, in which case it may well be that the incurred costs cannot subsequently be challenged on detailed assessment absent a good reason.

“However, what the amendments do make clear is that a party who does not challenge any incurred costs is not thereby taken to have agreed them and that it is not part of the court’s task to approve incurred costs. Nevertheless, the prudent (and quite possibly non-negligent) lawyer will always make clear that no incurred costs are agreed.”

Closing panel: (L-R) David Cooper, Kevin Latham, Dr Mark Friston, Deputy District Judge McDonald, District Judge Besford, District Judge McIlwaine and Master James

Kevin Latham of Kings Chambers followed to deal with proportionality. He outlined key pointers to help practitioners manage what remains a totally unpredictable process.

First was the importance of planning out what costs would be incurred. “It shouldn’t be too onerous because that’s what you’re doing in costs budgeting. The key to protecting yourself at detailed assessment is a detailed, thought-out case plan that justifies the expenditure against rule 44 and was drafted at the start.”

Linked to that was the need for an accurate and early analysis of the value of the claim – if it later emerged that the court thought it was budgeting a claim of much higher value, then that may provide ‘good reason’ to depart from the budget. “Over-pleading may cause substantial difficulties at the end of the case,” Mr Latham cautioned.

He also advised trying to get some indications from the trial judge on costs at the conclusion of the trial, and emphasised that “the importance of part 36 offers cannot be overstated”.

Tricky taskRopewalk Chambers barrister Shipla Shah then had the tricky task of trying to identify the interplay between qualified one-way costs-shifting (QOCS) and part 36 (clue – there doesn’t appear to be one), but did raise the question of whether the provision for set-off in rule 44.12 also applied to QOCS cases.

Conference18


She cited a recent decision in which a deputy district judge rejected set-off on the basis that it would be unfair to deny the claimant’s solicitors the costs they were entitled to. Ms Shah suggested this may not be right and the issue could yet be appealed.

Sarah Robson of Alpha Court Chambers – the self-styled ‘Portal Queen’ – went through a range of issues relating to the portals. Why should you care about portal costs if you don’t do those cases, which are, after all, fixed cost?

She had the answer: “The portal now impacts claims outside of low-value claims, with section IIIA costs biting all claims which started in the portal unless allocated to the multi-track. Even reasonably large claims can get caught. Therefore, it is important to know about the costs implications, even if you do not work with portal claims directly.

“Also, get a grip now on fixed costs and be ahead of the competition when Jackson’s proposed fixed costs extension comes in.”

But Professor Dominic Regan, an adviser to the ACL and a man with his ear to the ground, told delegates that it has become “achingly apparent that Lord Justice Jackson has abandoned fixed costs up to £250,000 or anywhere near that”.

He went on to speak, as entertainingly as ever, about the impact of conduct, highlighting a string of cases in recent months taking a hard line that “shows something really interesting is going on”.

The Supreme Court case of Times v Flood and Ors was one that demonstrated “a golden rule of litigation” – namely, that lawyers should “never write a word without thinking that one day what you say might end up being scrutinised by a judge”.

In another case, the judge “pounced” on solicitors’ correspondence – “no doubt fired off on instructions from their client” – which caused serious distress to the claimant and was plainly an aggravating factor. “When will some solicitors learn that they are not ventriloquists’ dummies? It is the duty of a practitioner to curb the ravings of their client,” Professor Regan said.

Last before lunch was Simon Edwards of 39 Essex Chambers, who took delegates through the key issues around non-party costs orders and ‘show cause’ applications.

Pet peevesDistrict Judge Lee McIlwaine, the regional costs judge based at Lincoln Combined Court, was given the no doubt enjoyable job after lunch of telling delegates where practitioners go wrong in court, having canvassed views and quotes from other unnamed regional costs judges and also masters from the Senior Courts Costs Office.

One judge’s pet peeve, for example, was advocates “being entirely unable to explain how the figures are arrived at, and throwing a strop when the DJ doesn’t snap to attention and award judgment for the claimant for whatever six-figure sum its solicitors have plucked out of the air”.

Dominic Regan

Shilpa Shah

Conference


19

Then there was “poor time estimates which one suspects have been given to advance the case up the list” and “asking the judge to make an order which neither he nor any judge below the level of the Almighty has any power to make”.

DJ McIlwaine’s consistent message was to bear in mind how little time judges have. That meant, to give a few more examples: not waiting for 10 minutes into your opening to tell the judge what you are actually asking for, not refusing to concede any point, not putting in cut-and-paste points of dispute and replies of excessive length, not simply reciting the CPR and chunks of well-known case law, and not drowning the judge in huge, largely irrelevant bundles.

Oh, and if you are a man, do up your top button: “It shows a lack of respect. You’d be surprised how many judges go ballistic over appearance.”

The good news, the judge concluded, was that he could trust Costs Lawyers to be professional, prepared, knowledgeable and trustworthy, “but I often wonder about others”.

Missing logicAfter Council member David Cooper had given a ‘view from the coalface’ – which stressed the mistakes some make when completing Precedent Q – and Master Jennifer James gave an overview of recent case law, the conference concluded with a panel of speakers taking questions from the audience.

Budgeting, unsurprisingly, was at the fore of the discussion, with District Judge McIlwaine making clear his personal antipathy towards the process, describing it as “a complete waste of time” when he compared how long he spends on budgeting compared to how long he used to spend on detailed assessment.

Dr Friston explained that he was “really struggling to see the logic” of certain aspects of the process. For example: “How can a budget be based on an assessment that doesn’t use hourly rates and then be assessed on a basis that does?”

Deputy District Judge Margaret McDonald, who is also head of the personal injury and costs team at Kenworthy’s Chambers, wondered how budgeting could remove the need for detailed assessment when incurred costs always end up there. The costs of the costs were only increasing, she suggested.

She also expressed amazement at how often parties do not use costs counsel for costs management hearings. Instead they use their main counsel, such as a personal injury specialist, who often fail to argue key points out of inexperience.

District Judge Besford sympathised with his Lincoln colleague’s frustrations, but noted that “there seems to be a growing acknowledgement that the alternative – fixed costs – is less attractive. So costs budgeting has got to work”.

It’s a sentiment with which a lot of Costs Lawyers would agree amid a day that gave members a lot of food for thought. �

Face-to-face session for students

Practical advice for students from Master James

Coffee break

Recoverability20

Where proceedings began before the Legal Aid, Sentencing and Punishment of Offenders Act

2012 (LASPO) reforms of April 2013, are the success fee and after-the-event (ATE) premium incurred after that date for later proceedings in the Court of Appeal and Supreme Court recoverable between the parties?

The Supreme Court recently addressed this important issue in Plevin v Paragon Personal Finance Limited [2017] UKSC 23, and held that they are by a majority of four to one.

This was a review by a full panel of five Supreme Court justices of the original costs assessment in the Supreme Court that had been undertaken by Master O’Hare and Registrar di Mambro. This can be sought where a question of principle is raised, as Paragon did.

It is unusual for the Supreme Court to give judgments such as this in costs proceedings, which demonstrates the importance of this case and general principles in issue that have a wide implication for other cases which commenced prior to LASPO.

The case principally concerned the interpretation of the transitional proceedings within section 44(6) of LASPO for the solicitor’s success fees and section 46(3) for the ATE premium, which are worded slightly differently.

Success feesDeeds of variation were entered into with the claimant to extend the original conditional fee agreement (CFA), which only covered proceedings up to and including trial, to the appeal firstly to the Court of Appeal and later to the Supreme Court.

Section 44(6) meant that recovery of the success fee payable by a person (P) was not prohibited provided that: • “The agreement was entered into

Recovery positionThe Supreme Court has clarified whether additional liabilities are recoverable when the original retainer was agreed before LASPO came into force but appeal proceedings took place afterwards, explains Caroline Cousins


specifically for the purposes of the provision to P of advocacy or litigation services in connection with the matter that is the subject of the proceedings in which the costs order is made, or

• Advocacy or litigation services were provided to P under the agreement in connection with that matter before the commencement day.”

The paying party argued that the variations of the CFA in August 2013 and January 2014 representing new arrangements entered into by the claimant for the provision of litigation services after 1 April 2013 meant that they were not covered by the transitional provisions.

The Supreme Court dismissed the arguments. Lord Sumption, giving the majority ruling, said: “This is, in my judgment, a bad point. The ‘matter that is the subject of the proceedings’ means the underlying dispute. The two deeds of variation provided for litigation services in relation to the same underlying dispute as the original CFA, albeit at the appellate stages.”

This meant that the success fee as previously assessed relating to the original Supreme Court proceedings (£31,378.92) was recoverable from the paying party, together with the Court of Appeal success fee (still to be assessed).

The court gave further consideration as to whether a variation of the CFA amends the principal agreement or discharges and replaces it. Lord Sumption said this depended on the intention of the parties.

“To establish a discharge and replacement, ‘there should have been made manifest the intention in any event of a complete extinction of the first and formal contract, and not merely the desire of an alteration, however sweeping, in terms which are still subsisting’: Morris v Baron and Co [1918] AC 1, 19 (Viscount Haldane).”

The “faint suggestion that the deeds of

Caroline Cousins is a Costs Lawyer at A&M Bacon, which was instructed by the receiving party in Plevin

Recoverability


21

variation were an ‘artificial device’ designed to avoid the operation of section 44(4) of LASPO” was also rejected.

ATE premiumThe claimant had taken out an ATE premium on 29 October 2008, at which stage the case was before the county court. The policy was topped up post-LASPO to extend cover for the Court of Appeal and Supreme Court proceedings.

The transitional provision made the arguments more complicated. This provides: “The amendments made by this section do not apply in relation to a costs order made in favour of a party to proceedings who took out a costs insurance policy in relation to the proceedings before the day on which this section comes into force.”

It was held that the relevant issue was the meaning of ‘proceedings’ and not the subject matter of those proceedings; the two appeals constituted part of the same proceedings as the trial.

Lord Sumption said: “The question posed by section 46(3) of LASPO is whether the fact of having had an ATE policy relating to the trial before the commencement date is enough to entitle the insured to continue to use the 1999 costs regime for subsequent stages of the proceedings under top-up amendments made after that date.”

His answer was: “The purpose of the transitional provisions of LASPO, in relation to both success fees and ATE premiums, is to preserve vested rights and expectations arising from the previous law. That purpose would be defeated by a rigid distinction between different stages of the same litigation.”

In terms of quantum, this was the biggest success for the claimant (and the insurer, given that the premium was self-insured in the event that it was not recovered between the parties), as her ATE premium for the original Supreme Court proceedings had been assessed at £531,235, with the assessment of the Court of Appeal premium still to be determined.

Dissension in the ranksThe dissenting judgment from Lord Hodge argued that the provisions should not be construed as protecting any wider expectation of how the litigation might be funded after LASPO came into force. In his view, success fees should only be recoverable where the CFA provided for such later proceedings initially.

However, he acknowledged the force of the view that the transitional provisions were

intended to cover the whole litigation, but considered it was a problem in the wording that had been used within the legislation.

CFA assignmentThe court also dealt with a challenge in relation to the validity of the assignments of the claimant’s CFA, upholding the decision of the costs judges that the CFA was validly assigned to later firms.

Miller Gardner had entered into a CFA with the claimant in June 2008 and, as a result of organisational changes, the firm first became Miller Gardner LLP and then Miller Gardner Limited. The defendant challenged the arrangements on a technical basis in relation to the wording of the transfer agreements, arguing that the provisions only covered work done to the date of the transfer and not work conducted thereafter.

Lord Sumption held that the point “has no merit and was rightly rejected”, adding: “If this were correct, it would mean that the only right of the successor firm was to bill the clients for work done before the transfer date, leaving them with no solicitor to act for them other than the defunct shell of the old firm. This plainly cannot have been intended.”

Further, even if Paragon’s argument was sound, it would lead nowhere as a result of correspondence between the solicitor and the claimant and Mrs Plevin continuing to instruct them.

CommentAs a matter of general application, this ruling demonstrates that, for ongoing cases where the funding arrangements were entered into under the pre-LASPO regime and there are later proceedings in higher courts, the claimant can both extend her CFA and take out additional ATE cover.

However, it is important to note that there must not be an intention of the parties to the CFA to extinguish that retainer (as opposed to varying it) and the ATE premiums here were top-ups and not fresh contracts of insurance.

The Supreme Court did not specifically say whether it was permissible for a claimant with the benefit of ATE insurance with one insurer to take out a separate policy with another where the original insurer was not able or willing to provide top-up cover. However, given the judgment at paragraphs 21 and 23, this would appear to be permissible.

The Supreme Court has ensured that there continues to be fairness to claimants who

entered into litigation on the basis of the funding system that existed prior to the LASPO changes. This was the principal reason for its decision – the court acknowledged that if the ATE premium was not recoverable, it would “alter the balance of risks on the basis of which the litigation was begun”.

It was also a case in which the claimant recovered damages of £4,500, yet the assessed costs of the Supreme Court proceedings alone totalled £751,463 (before interest or further assessment costs), with the costs of the other stages of proceedings still to be quantified.

It shows starkly what a difference the old proportionality test made when it came to the assessment of costs (and the application of Rogers v Merthyr Tydfil County Borough Council [2006] EWCA Civ 1347 and Coventry v Lawrence (No3) [2015] UKSC 50) in relation to the ATE premium), as compared to recent decisions upon the application of the current proportionality test – although it is worth noting that Mrs Plevin’s case was a test case.

The case on the whole was one that was hard fought by Paragon (both in terms of the substantive proceedings and in the costs proceedings), and which had set a precedent in terms of the successful recovery of payment protection insurance claims.

I suspect that cases such as this may not be able to proceed under the present funding regime, but that is a different issue in relation to the intentions of Parliament. �

Expert costs liability22


Third-partyAn increase in applications to recover costs from experts involved in a case is likely in the era of QOCS, suggests Colm Nugent. Here, he looks at how they should be pursued

Recent reported developments in a personal injury claim involving Dr Grace Kerali (in which I appeared)

have thrown a spotlight onto a rarely explored aspect of costs recovery: the recovery of legal costs from one of the experts involved in the case.

It is a truism that the expert evidence in a case can radically affect the outcome. But while the expert undoubtedly owes duties of care to the party instructing them and overriding duties to the court, the expert owes no duty to the opposing party. However, it is the opposing party who may be the party more affected by the evidence given.

The CPR entitles a party to apply for costs against a non-party. This article considers whether such powers give rise to a potential claim for costs as against an expert and what steps the paying party should take if it intends to embark upon such a course.

Explicit dutiesUnlike claims as against a third-party funder, an expert owes explicit duties to the court. In some cases, the expert will have appeared in court, given evidence and had that evidence tested. The judge will then have made findings about that evidence which may form the basis of a potential claim for costs by the opposing party.

But in smaller claims, and especially so in smaller personal injury claims, the expert will not be in court and the expert will not have had the opportunity to address the issues

Colm Nugent is a barrister at Hardwicke Chambers

which have arisen at trial and upon which the claim for costs may be predicated.

In such circumstances, I would suggest that the expert concerned is entitled to be notified at the earliest possible opportunity of the facts and matters which may give rise to a non-party costs order. That point may be well before any actual trial.

The expert can then consider what steps they may wish to take in the litigation. For example, the expert may wish to be joined to the action as an interested party or intervener pursuant to CPR 19.2(2) and CPR 19.4(2)(b) so that he/she may be represented in their own right and make appropriate submission as regards the conduct of the action.

The party pursuing the application would be well advised, even if the expert is an interested party, to make a formal application to join the expert as a party for the purposes of making the costs order, pursuant to CPR 19.2(2). Again, it is suggested that this be done at the earliest point where such an application is a realistic prospect.

Close connectionGiven that the course proposed is a highly unusual one in the context of litigation, the expert ought to be entitled to know the precise basis of the application made and the evidence to be relied upon. Whether the court will require a formal statement of case is uncertain on current practice, but the expert – if well-advised – will no doubt demand one.

The expert ought, if need be, to be able to call evidence in their own right to meet the

politics

Expert costs liability

MARCH/APRIL 2017 | ISSUE 2

23

allegations and/or the evidence brought against them. Insofar as there has been a trial in which the expert has participated, and cross-examination and findings made, the issues may be clearer. In circumstances where there has not been a trial, then matters are much less certain and a degree of formality will ensure fairness.

I would suggest the document – whether it is a statement of case or not – should identify, at a minimum:• The allegations pursued (and, if the

allegations are akin to Bolam incompetence, similar particularity ought to be provided);

• The evidence relied upon;• The findings the court is invited to make;• The costs consequential upon those findings

the applicant seeks to recover.

There needs, of course, to be a demonstrable close connection between the claim for costs and the conduct complained of. It is for the application to establish a prima facie case as to why they are entitled to join an expert for the purpose of seeking relief – which may be declaratory relief forming the basis for a costs application at a later stage.

And the applicant must meet the minimum threshold of proving a link between the joinder of the expert and costs consequences it is claimed the expert has occasioned. In XYZ v Various Companies, Sub. nom. PIP Breast Implant Litigation [2014] EWHC 4056 (QB), an application to join in an insurance company for declaratory relief was refused.

Mrs Justice Thirlwell said this was because, inter alia: “There is no connection between their claim for a declaration and the claims currently being made, as I have described them earlier. The question raised on the declaration is not connected with the subject matter of the proceedings.”

High thresholdSince Jones v Kaney [2011] experts are no longer immune from suit by expert’s client. However, the position as regards the opposing party, to whom the expert owes no duty, is

somewhat different. In such instances, a non-party costs order may be made in accordance with CPR 46.2:

“(1) Where the court is considering whether to exercise its power under section 51 of the Senior Courts Act 1981 (costs are in the discretion of the court) to make a costs order in favour of or against a person who is not a party to proceedings, that person must –

(a) be added as a party to the proceedings for the purposes of costs only; and

(b) be given a reasonable opportunity to attend a hearing at which the court will consider the matter further.”

However, the threshold is, I would suggest, a high one. In Phillips v Symes (No2) [2004] EWHC 2330 (Ch) Peter Smith J indicated (obiter) that it may be appropriate to make a costs order in circumstances against an expert witness who, by his/her evidence, caused significant expense to be incurred and did so in flagrant and reckless disregard of his duties to the court; Arthur JS Hall and Co v Simons [2002] 1 AC 615 and Stanton v Callaghan [2000] QB 75 applied.

In Phillips, the expert had given evidence and had been tested in cross-examination. It was in that context that the judge held that the only warning required by expert witnesses as to the potential consequences of their giving evidence was the self-evident one set out in the 1998 rules and in the declaration that the expert signed.

That legitimate right must, of course, be balanced by the entitlement of experts to give robust and sometimes unpopular opinions, unfettered by concerns that they may be in the firing line for costs applications should the party for whom they act ultimately lose

That declaration made it clear that the expert could be the subject matter of contempt proceedings. Bearing in mind the severity of those sanctions, one expected an expert to be alive to potentially adverse consequences in the event that he breached his duty to the court – Orchard v South Eastern Electricity Board [1987] QB 565 applied.

It is envisaged under the section 51 procedure that the trial judge will determine the application for costs against the third party. However, in circumstances where a judge made adverse findings against an expert who had not taken part in the actual trial (on the basis of the claimant’s evidence only, for example), there is a question as to whether a later hearing by the same Judge to determine that expert’s costs liability would potentially engage the expert’s article 6 rights to a fair trial.

An expert could legitimately complain that the complaints against him/her had been pre-determined without the expert’s presence and a fair trial was not possible in such circumstances.

An alternative may be for the judge to recuse himself/herself and direct that any judge hearing the matter should not consider themselves bound by the findings made as regards the expert evidence. It is likely that the applicant would vigorously oppose any such suggested approach.

With the advent of qualified one-way costs shifting protection, defendants are understandably looking to exploit the legitimate opportunities they have to recover their costs outlay in successfully defended claims.

That legitimate right must, of course, be balanced by the entitlement of experts to give robust and sometimes unpopular opinions, unfettered by concerns that they may be in the firing line for costs applications should the party for whom they act ultimately lose. It is a balancing act that the courts are likely to have to undertake on a more frequent basis in the future. �

Judicial review24


Public law’s disgraceThe value of judicial review is greatly undermined by high costs making it inaccessible to most. Tom Hickman considers the problem and suggests a solution

have no control and no visibility over the level of potential adverse costs. Many individuals would be bankrupted by an adverse costs order. Even those who would not be bankrupted could not rationally be expected to risk their savings or the equity in their house in bringing a judicial review claim to protect themselves and their family from arbitrary action by a public body.

The amount of adverse costs claimed by successful defendants varies widely. For a very simple two-hour judicial review against a government department, the costs of losing at trial would probably be in the region of £8-12,000. This is the cheapest end of the spectrum because, on a claim against central government, counsel will be acting on Attorney General’s Panel rates (well below commercial rates) and all the solicitor work will be done in-house.

A moderately complex claim lasting a day and not brought against a central government department – say, a regulatory body – using external solicitors would be expected to cost in excess of £40,000 (plus VAT) and potentially more than £100,000. For a substantial two-day judicial review, the cost range is probably between £80,000 and £200,000.

But these are all fairly loose estimates and the inability to predict costs with certainty is an additional problem. The potential for interested parties to seek their costs adds to this mêlée. While the default position is that interested parties cannot recover their costs, they sometimes do so and very often ask for them. Since they are often private companies affected by a decision, the risk of having to pay their costs will very often deter a claim from being brought.

Rolls-Royce regimeOne of the reasons why it is difficult to give even reasonably precise figures is that the costs following trial are often put off to detailed assessment. To give more concrete figures, we can look at permission stage costs which are ordered by a judge following the refusal of

Tom Hickman is Reader in Law at University College London and a barrister at Blackstone Chambers

What is the most important issue in public law? Experts might think it is the gradation of principles

of substantive review or the proper limits of judicial interventionism, but actually it is this: the majority of the population cannot bring a judicial review claim.

How can this be? After all, have not the courts liberalised the law of standing and are not the courts open to all? This is indeed so. But it demonstrates only that the problem I am raising goes to the very heart of public law as a jurisdiction.

It is the central conceit of public law that it represents a jurisdiction that has been developed by the courts to protect individuals from abuses of power committed by public officials. The cases and textbooks are replete with self-congratulatory descriptions of public law in such terms. Indeed, the courts often rely on the supposed availability of judicial review as a reason for upholding the proportionality of coercive measures. For example, in R (XH and AI) v SSHD [2017] EWCA Civ 41, the court said that “an individual whose passport has been cancelled is not left without a remedy” because the decision is “subject to judicial review”.

The reality is otherwise. Most people could not bring a judicial review. They could do so in a theoretical sense but, as all public lawyers know, a mere theoretical entitlement does not count as a right. To register as a right, an entitlement must be capable of actually being exercised and enjoyed.

No meaningful accessThe vast majority of the population have no access to judicial review in any meaningful sense. This is because of the rule, derived from private law, that the claimant must pay the costs of the defendant and, potentially, also of any interested party if a claim is lost.

Even if an individual acts as a litigant in person or negotiates a ‘no win, no fee’ (or reduced fee) arrangement with lawyers, they

Judicial review


In short, judicial review provides a Rolls-Royce form of litigating disputes with public bodies. The problem with judicial review is that most people cannot afford a Rolls-Royce.

Limited exceptions Judicial review is, of course, not the only area of litigation where there is a serious access to justice problem caused by the risk of adverse costs. But then, how is it that so many judicial reviews are begun? The answer is that judicial review is accessible to the following categories of people:

(1) Individuals, organisation and companies with very deep pockets. In practice, this seems to mean very high-net-worth individuals, successful and established companies and public authorities (such as local authorities challenging central government decisions).

(2) Individuals who have relevant litigation insurance. In practice, this seems only to mean professionals in regulated professions challenging disciplinary decisions, such as financial advisers, doctors and dentists.

(3) Individuals, companies and other organisations that have costs protection.

The first two of these categories needs no elaboration. The third is where the interest lies. Costs protection is available to individuals through legal aid – but, of course, very few people today qualify for it due to substantial restrictions on the scope of cover and also the means test – while there

25

permission where the court summarily assesses adverse costs in a specified amount.

In one recent unexceptional judicial review which would have had a one-day trial concerning an allegedly defective investigation conducted by a public body land owner, the permission judge refused permission with costs of more than £5,000. In a similarly sized challenge to the Advertising Standards Authority, the permission judge awarded adverse costs of more than £3,000. These are unexceptional figures in unexceptional cases, and they are merely the costs of the permission stage.

Given that students are taught that judicial review is a simple and quick procedure which is decided without trials of fact on the papers, such costs levels may seem extraordinary. One of the reasons the costs are high is that claims for judicial review must be brought in the High Court (or, in some cases, Upper Tribunal) even if they have no monetary value at all.

Even for straightforward claims, a defendant must instruct solicitors and counsel. The fact that issues of law are raised usually calls for the citation of authorities and legal submissions are rarely short on either side. Moreover, judicial review claims invariably raise issues that are considered important to the defendant on grounds of principle, often because of perceived implications for other cases.

Therefore, where they are fought, they tend to be well resourced by defendants.

is also an opt-in costs protection regime in the niche area of environmental claims, by which claimant costs are capped at £5,000 with a reciprocal cap of £35,000 for defendant’s costs.

Then there are cost-capping orders (CCOs), the statutory successor to protective costs orders. These have enabled many cases of wider public importance to be litigated. The very existence of this regime represents a recognition that it is often unreasonable for a person or company to litigate a claim due to the adverse costs risk: a condition for obtaining a CCO is that a litigant would not otherwise pursue their claim and it would be “reasonable” for them not to pursue it given the adverse costs risk.

CCOs are, however, only available in limited circumstances, of which the most significant limit is that they are only available in cases of wider public importance. There is also no protection for permission stage costs.

Serious problemGiven the rationale for judicial review, there is no proper basis for ameliorating the effective bar on access to the courts’ supervisory function only in cases in which an individual qualifies for legal aid, in environmental claims or in cases of wider public interest.

Judicial review exists to protect individuals from abuses of power by public authorities and

Given the rationale for judicial review, there is no proper basis for ameliorating the effective bar on access to the courts’ supervisory function only in cases in which an individual qualifies for legal aid, in environmental claims or in cases of wider public interest

Judicial review offers a Rolls-Royce regime but not many people can afford it

Judicial review26


make a contribution to a defendant’s costs given the resources available to it. Such an application would have to be made and determined at the permission stage so that claimants would know prospectively what their costs exposure would be and could make submissions on the appropriate level.

In cases brought by a private individual or SME, it would be exceptional for any significant amount to be ordered to be payable in the event that a claim, found to be properly arguable, ultimately fails. No doubt principles governing what is reasonable for claimants to pay would quickly emerge and, to ensure that claims are not deterred by permission stage costs, if a claim is rejected at that stage, costs would only be awarded against a claimant if the claim was identified as being totally without merit (it is not impossible to countenance a variation of such a rule to address heavy commercial judicial reviews).

There is no ideal solution. However, a regime such as that sketched here would meet the central problem in public law and would be fair overall.

ConclusionPublic law is squarely directed at protecting individuals. Public lawyers, both in court and outside it, endlessly debate the best form of substantive rules to achieve this end yet, despite the fact that those who work in public law are supposed to be attuned to the importance of substance over form, public law is merrily carried on with very little concern for the fact that judicial review is simply not available for most people.

For such people, the glistening array of cutting-edge doctrines that have been developed in UK public law are an irrelevance. This is public law’s disgrace.

But all is not lost. Public law practitioners, academics and judges have proved that ingenuity and determination can produce change. The development of public law is itself testament to this. There is no shortage of centres, units, institutes, associations and pressure groups working within public law that could take up this issue and help to ensure that access to judicial review remains at the top of the agenda. The current consultation on fixed recoverable costs provides an opportunity, at the very least, for public lawyers to reflect and engage.

This is an edited version of an article published on the UK Constitutional Law Group Blog. �

solution, it comes with some serious problems. I mention just two here.

First, it would not adequately address the main issue of unaffordability. A one-day judicial review in New Zealand under its scale cost regime is likely still to lead to recoverable adverse costs in excess of $20,000 (£11,000).

Secondly, it is extremely important in cases funded by legal aid or in complex judicial reviews currently subject to a CCO that claimants can recover their reasonable costs in full, or litigating such cases will often be uneconomic. It is unlikely that many of the leading public law cases over the past few years would have been litigated had the vast majority of costs of the litigation been irrecoverable.

That is not to say there is no possible role for fixed costs in judicial review, but the current model does not appropriately reflect the issues in this particular area of civil litigation.

What judicial review badly needs is a system of qualified one-way costs shifting (QOCS) such as was introduced for personal injury claims in 2013. Jackson LJ recommended that such a regime be applied to judicial review but this was never carried out. The need for such a regime has also been recognised in the context of constitutional litigation in South Africa.

I would like to see a QOCS regime in modified form; a regime which requires a defendant to apply at an early stage for any qualification to the default rule by reference to the fact that it would be reasonable for the claimant to

to ensure that public bodies act according to the law. However, that is an empty protection in the vast majority of cases concerning individuals and many cases involving SMEs given the risk of adverse costs.

Some examples of situations in which judicial review is effectively barred are provided in a submission prepared by Blackstone Chambers for Lord Justice Jackson’s review of the extension of fixed recoverable costs.

They include the parent of a disabled child who works part-time and cannot challenge the decision of the local authority restricting support services; a victim of human trafficking challenging the refusal of local authority emergency accommodation who has obtained temporary work as a cleaner and is thus disbarred from legal aid; the SME that cannot challenge its ejection from a tender exercise; and a person who cannot challenge the arbitrary cancellation of their passport.

Such examples serve to emphasise that this is a really serious problem with judicial review that goes to the very heart of the jurisdiction.

A solutionWe now await Lord Justice Jackson’s conclusions. Notably, fixed costs apply to judicial review claims in New Zealand. Such a regime would reduce the recoverable costs in judicial review and would provide much-needed certainty for claimants but, while it might seem like an attractive, albeit partial,

People who have their passports arbitrarily cancelled do not have access

to judicial review, say barristers

Counsel for the claimant in this case indicated that, in his view, there were likely to be plenty of other cases where similar circumstances would arise. While the case is first instance only and therefore not binding, it does show the potential for satellite litigation arising from pre-LASPO cases and the importance of considering if litigation services were genuinely provided by 31 March 2013.

For any CFA entered close to or on 31 March 2013, claimants need to be prepared to evidence the provision of litigation services by that date. �

CFAs


27

The CFAA recent ruling has raised the possibility that CFAs signed just before 1 April 2013 are not enforceable if no substantive work was done until after that date, reports Bob Hanlon

Who can forget those whirlwind days prior to LASPO when solicitors had clients and counsel queuing to sign

up to conditional fee agreements (CFAs) before 1 April 2013? The sigh of relief when the client had signed and the recoverability of additional liabilities preserved was audible. However, a recently reported decision of District Judge Wildsmith sitting in the county court at York threatens this state of affairs.

Enforceability disputeChoudhury (by his litigation friend) v Markerstudy was a case where the claimant had been injured in a road traffic accident on 15 March 2013, with the matter subsequently settling for £1,150 and concluding with an infant approval hearing in March 2015.

The claimant submitted his costs for provisional assessment. The assessment outcome was not accepted by the defendant, who sought an oral hearing. The defendant asked the court to review their point of dispute relating to whether the CFA signed by the claimant’s litigation friend on 1 April 2013 was enforceable. The defendant argued that costs were claimed under the pre-LASPO regime which became unenforceable on 1 April 2013.

The claimant relied on section 44.6(b) of LASPO and the collective CFA entered into with DWF in December 2011. He maintained that it provided for a valid pre-LASPO retainer,

Bob Hanlon is a Costs Lawyer and advocate at Victoria Square Chambers

Because no litigation services were provided to the litigation friend or the claimant before 1 April 2013, the CCFA could not be relied on by the claimant as a valid funding arrangement. The bill was thus assessed at nil on oral review and permission to appeal was refused

with work having been undertaken before 1 April 2013.

The defendant accepted that if litigation services had been provided before 1 April 2013 then the retainer would be valid, but argued that the litigation friend had in fact entered into a post-LASPO agreement and, as such, the previous arrangement was unenforceable.

Evidence neededOn examination of the bill and file, just one (undated) routine telephone call and one routine letter (dealing with client care) had been incurred prior to 1 April 2013. Therefore, the defendant maintained that no litigation services had been provided before 1 April 2013 and the first type of work that could reasonably be considered as such was provided on 4 April 2013, when initial steps on the file were considered.

The claimant argued that the undated routine call fell within the definition of litigation services and the arrangement was a clear ‘pre-commencement funding arrangement’. The district judge disagreed and said the call related to funding and was therefore not a litigation service.

District Judge Wildsmith ruled that, because no litigation services were provided to the litigation friend or the claimant before 1 April 2013, the CCFA could not be relied on by the claimant as a valid funding arrangement. The bill was thus assessed at nil on oral review and permission to appeal was refused.

gold rush

Regan28


The price of

Professor Dominic Regan says a ruling from the Senior Courts Costs Office is the best advertisement for the costs profession he has ever seen

Every practitioner should look and learn from the measured judgment of Master Whelan in Jago v Whitbread

Group PLC. Though decided in October 2016, it has only just surfaced and it is nothing less than the best advertisement for the legal costs profession I can ever recall.

The real problem was that the solicitors were not comfortable with costs. Had they instructed a competent Costs Lawyer, they would have been tens of thousands of pounds better off.

Bizarre inclusionA trainee legal executive was given the job of drawing the bill. My view is that a trainee is only as good as the person who is training them and, indeed, the master commented benevolently on the actions, albeit misguided, by the young gentlemen concerned.

An informal bill of costs claiming a tad more than £100,000 was served in March 2015. It bizarrely included a success fee, perhaps because someone naively thought that you got one if you were indeed successful. The only slight problem was that no conditional fee agreement (CFA) had ever been entered into.

Fully eight months later, a notice of commencement of detailed assessment was served with a new bill set at approximately £10,000 less, yet still claiming a success fee and at a higher level than before even though the paying party had established from the claimant that no CFA existed. Incidentally, delay is never clever when one is waiting to be paid.

Points of dispute generated a fresh bill of costs two months later. The defendant had

merely requested a revision to the original bill. Now, the bill had plummeted by £40,000. Correspondence led to a further amended bill being dispatched.

This saga provoked the paying party to make application under CPR 44.11(1) and (2). This empowers the court to make an appropriate order where the conduct of a party or their legal representative, “before or during the proceedings or in the assessment proceedings, was unreasonable or improper”. The astute will take note of and remember that invaluable measure.

Colourful languageMere improper conduct – rather than serious ‘strike off the roll’ misdemeanours – falls within the scope of the test (see Ridehalgh v Horsefield [1994] 3 All ER at 861 and 862). It does not matter whether it violates the letter of any professional code.

Surprisingly, the claimant firm asserted that they lacked the resources to employ a costs draftsman. That is quaint, since CPR 47.20 goes so far as to say that these very costs are ordinarily recoverable. The expense of the innocent trainee having an unsuccessful stab at the bills was nigh indistinguishable from that of using an experienced Costs Lawyer to do the job.

In colourful language, Master Whelan declared that this was a “cock up” and there was no suggestion of duplicity. Nevertheless, the conduct was improper and so a hefty 50% of the bill was disallowed. Tens of thousands of pounds went out of the window.

Before concluding his judgment, the master gave a timely reminder of what was said about bills in Bailey v IBC Vehicles Ltd

[1998] 3 All ER 570. Lord Justice Henry referred to the “solemnity” involved when checking and signing a bill of costs. Breach of the duty to scrupulously ensure that the bill is accurately drawn “should be treated as a most serious disciplinary offence”. Those words should be fixed in the mind of every solicitor signing a bill.

Recent adverse publicity about overcharging and the improper inflation of costs would suggest that the duty identified in Bailey has perhaps escaped a new generation.

The message is clear: always use a Costs Lawyer to get a decent job done. Remind clients that the person who signs the bill off is the one on whom the responsibility will always fall. It is, therefore, imperative to get things right. �

In colourful language, Master Whelan declared that this was a “cock up”

costs phobia£

Case notes29

Small claimsDammermann v Lanyon Bowdler LLP [2017] EWCA Civ 269

In 2002, the appellant entered into a legal mortgage with a bank. The appellant subsequently defaulted on his mortgage payments and, consequently, the bank appointed receivers to sell the charged property under the terms of the mortgage and the Law of Property Act 1925. The appointed receivers retained the respondent solicitors to conduct the sale of the charged property.

The property was sold and the respondent rendered a bill to the receivers which was duly paid and became part of the appellant’s overall liability under the terms of the mortgage. In a claim against the respondent, the appellant sought to challenge the level of fees charged by it for that work.

The claim, which had been allocated to the small claims track (SCT), was dismissed because there was neither an agency nor any contractual relationship between the parties and, consequently, the appellant had no standing to make a claim against the respondent. No order as to costs was made at the first instance hearing.

The appellant was granted permission to appeal by a circuit judge. In dismissing the appeal, the judge concluded that the principles that would apply to a common law agency contract did not apply to the facts of the present case. The respondent

Legal updateSummaries are from Lexis®Library, All England Reporter service unless otherwise stated. For the full judgments, members should try Bailii (www.bailii.org), a free resource, Lexis®Library (www.lexisnexis.com/uk/legal) or other law reporting services. Members are reminded that decisions of lower courts are only included where an issue is determined that is novel or of particular interest. Such cases should be cited with care. The judgments in such cases can be persuasive but are not binding on higher courts


applied for costs. However, since the case had been allocated to the SCT, the court’s jurisdiction was proscribed and the respondent’s application could only succeed on the present facts under CPR 27.14(2)(g), namely, that the appellant had “behaved unreasonably”. In the circumstances, the judge took the view that the appellant had behaved unreasonably and made an order for costs accordingly. The appellant appealed against the costs order.

The appellant submitted, first, that the unreasonableness of his behaviour had to be seen in the light of the fact that the same judge had granted him permission to appeal on the basis of the case that he went on to argue at the full appeal hearing.

Second, the point of law which had been eventually decided against him was, to a degree, obscure, as the mortgage deed indicated that the receivers had been acting as his agents but, as the judge had found, the solicitors had not. Accordingly, in judging the appellant’s ‘unreasonableness’, the seeming obscurity of the point of law had to be taken into account.

Third, the judge had been wrong to take his rejection of a £1,000 settlement offer into account and that, if he had been afforded time, he would have informed the judge of his counter-offer to settle at a higher figure, which the respondent, in turn, had refused. Consideration was given to the authority of Ridehalgh v Horsefield [1994] 3 All ER 848.

HELD: The appeal would be allowed.In considering the proper meaning of CPR 27.14(2)(g), it was doubtful that any useful general guidance could be given in relation to the circumstances in which it would be appropriate for a court to decide whether a party had behaved unreasonably, since all such cases had to be highly fact-sensitive.

In the somewhat different context of the jurisdiction to order a party’s legal (or other) representative to meet what were called ‘wasted costs’ (defined as costs incurred as a result of any improper, unreasonable or negligent act or omission of such representative), the court in the case of Ridehalgh stated that “conduct cannot be described as unreasonable simply because it leads in the event to an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic and as reflecting in a practitioner’s judgment, but it is not unreasonable.”

Without wishing to incorporate all the learning about wasted costs orders into decisions under CPR 27.14(2)(g), that statement gave sufficient guidance on the word ‘unreasonably’ to judges dealing with cases allocated to the SCT. Ridehalgh was a case dealing with acts or omissions of legal representatives, but the meaning of ‘unreasonably’ could not be different when applied to litigants in person in SCT cases.

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Further, the CPR could have provided that, on appeal, the normal rules as to costs should prevail. However, CPR 27.14(2) applied in terms to costs relating to an appeal. Accordingly, an appellate court should be wary of ordering costs on appeal to be paid if they had not been ordered below, unless circumstances on appeal were truly different.

The appellant’s first two points had considerable force. Although the judge had not been in error in the manner in which he had approached the appellant’s rejection of the settlement offer of £1,000 (since he had been entitled by CPR 27.14(3) to take it into account and had been justified in doing so), the judge had, however, been in error in having failed to take account of the nature of the somewhat intricate point of law upon which the appeal had turned, and that he himself had given the appellant permission to argue the point.

Accordingly, it was not possible to hold that the appellant had behaved unreasonably in having pursued his appeal. The rejection of the £1,000 settlement offer was the only remaining factor that might have been supportive of a finding of unreasonableness, but that, on its own, was incapable of satisfying the test in CPR 27.14(2)(g). With no other basis for awarding costs under the SCT regime in CPR 27.14, the respondent’s application for costs had to be dismissed.

The judge’s order that the appellant was to pay the costs of the appeal to the county court was set aside and replaced with an order of ‘no order for costs’. Further, there could be no order for the costs of the present appeal either.

The appellant appeared in person. Hannah Tildesley for the respondent.

Judicial reviewR (on the application of RA) v Director of Public Prosecutions [2017] EWHC 714 (Admin)

The claimant had been subject to an investigation concerning a criminal conspiracy in which it was thought that he might have been involved. In March 2014, he began pressing the defendant Director of Public Prosecutions (DPP) for a decision as to whether he was to be charged with any criminal offence. In July, the claimant issued judicial review proceedings to obtain an order that a decision be made by the DPP as to whether he was to be charged with a criminal offence or offences.

In those proceedings, the DPP offered an undertaking that a charging decision would be made by 30 November 2015. The judge decided he ought not to allow the judicial review claim to proceed, so long as the DPP complied with the undertaking. The DPP applied for costs and no order for costs was made, but the judge stated they would be dealt with in writing and he invited submissions. In November, it was decided that the claimant would not be charged.

In January 2016, the claimant wrote to the Administrative Court Office (ACO), stating that he wished to apply for his costs and the ACO so advised the Crown Prosecution Service (CPS). There was then a period of complete silence from the relevant department for in excess of 13 months. In June 2016, it was ordered that there be no order for the payment of the DPP’s costs, and that any application for costs by the claimant had to be filed within 14 days and supported by short submissions (the Rose order). On 1 July, the claimant made an application for costs within that period, supported by written submissions, and, in October, he was granted his costs in the sum of £20,000 (the Goudie order).

The present proceedings concerned the DPP’s application for an order to set aside/revoke the Goudie order.

The DPP’s contentions included that she had been unaware that she had been ordered to serve submissions in the summer of 2016, and there was merit in the submission that she should not pay any costs and the claimant should, in fact, be ordered to pay her costs.

HELD: The approach to be adopted to a situation dealing with a failure to put in any submissions in opposition to, or in relation to, an application for costs was that a good explanation for not participating in the process had to be produced by lodging any submissions, that the party acted promptly on learning of the order which was sought to be set aside and that there were real prospects of success in defence.

There could simply be no excuse for the relevant CPS department not engaging with the matter of outstanding costs at all and not engaging with the correspondence. The same point, yet with even more force, could be made for the failure to respond when the claimant had properly served upon the CPS his application for costs.

There was nothing in the point that the Rose order had not been received in the DPP’s favour at all. That order was expressly referred

to in the claimant’s application for his costs, and the CPS’s assumption that directions would be issued by the court had been entirely misplaced and there was no sensible basis for having made such an assumption.

There was no doubt that the CPS had acted promptly when having learned of the Goudie order. However, there was simply no good explanation available for the DPP’s failure, through those who supposed to have been acting on her behalf in the judicial review proceedings, to take any substantive or procedural steps in the action whatsoever between September 2015 and October 2016 until the Goudie order had been made.

That inaction had been contrary to the duty imposed on the DPP as a party to the litigation, to be co-operative and to help the court to further the overriding objective. It also ignored the express communications to the relevant CPS department by the ACO itself, which had directed the CPS to the relevant approach and principles, and had even provided copied extracts of the Administrative Court guidance and relevant authority.

There was no excuse for having failed to lodge submissions opposing the claimant’s application for his costs or even having made a belated application for the DPP’s costs. Therefore, even if the DPP could show that she had had good grounds for opposing the claimant’s costs application, had the CPS troubled to do so on her behalf at the time, there was no good reason for invoking the power to vary or revoke the Goudie order. Accordingly, the application failed and the Goudie order would not be revoked or varied in the way sought by the DPP.

William Frain-Bell (instructed under the Direct Access Scheme) for the claimant. Tom Little (instructed by the Director of Public Prosecutions) for the DPP.

Private prosecutionHaigh v Westminster Magistrates’ Court [2017] EWHC 559 (Admin)

The claimant British national had been detained in prison in Dubai for alleged fraud. He applied to bring a private prosecution against the interested parties, whom he alleged had conspired to defraud him and had engaged in human trafficking.

The claimant brought judicial review proceedings against a judge’s decision, dismissing his application for summonses

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to be issued, finding that it had been improper to launch the private prosecution, and against his order that the claimant to pay costs of £230,446.14 to the interested parties. The Divisional Court dismissed the judicial review application and held that the judge had been entitled to find that the claimant’s application to instigate a private prosecution had constituted an ‘improper act’, and that he had had jurisdiction to consider the quantum of costs (see March/April issue for ruling).

In the present proceedings, the court considered a number of matters relating to costs, which had remained unresolved.

The first issue concerned the material on which the court’s decision should be based. The claimant submitted that the court should take account of his witness statement of 25 April 2016 and that it should only countenance any order of costs in favour of the interested parties after an evidential hearing at which the facts alleged in the claimant’s statement were adjudicated upon.

The claimant further submitted that there should be no order as to costs, in circumstances where he had been successful on one of the grounds that had been in issue (ground 4), as a result of which the costs orders had been reduced.

The interested parties submitted that the claimant should be ordered to pay their costs. A question arose as to whether the claimant

should be required to bear two sets of costs, where there had been separate representation. Consideration was given to the fact that the interested parties had made offers within a reasonable time of the judge’s decision on the papers granting limited permission to apply for judicial review.

The second issue was whether the interested parties’ costs should be assessed, if not agreed, on the standard or indemnity basis. The court considered the claimant’s allegations that the interested parties’ claims for costs before District Judge Ikram had been fraudulent, and the contention that privilege could not be used to shield an offer to settle of 10 August 2016, which had been rejected. Consideration was also given to part 36 offers which had been made, and to CPR 36.17(4)(b) and 44.3(1) to (3).

Third, the court considered whether the interested parties were entitled to pre-permission costs. The claimant submitted that he should not have to pay the costs of a hearing for renewal of the permission application on 12 July 2016. Consideration was also given to whether there should be a summary or detailed assessment of the costs. The first and second interested parties’ costs were £106,462.65 and the third interested parties’ costs were £38,910.67. The court also considered whether there should be a payment on account.

HELD: (1) The claimant’s suggestion in respect of the first issue was rejected. What was proposed would be a classic example of satellite litigation. The court was considering what costs orders should be made in relation to the judicial review application which it had heard. The court would make its decision on the basis of the submissions of the parties and the documents which were before the court as part of that application. There would be no further hearing and no oral evidence.

In all the circumstances, the claimant should be required to pay the interested parties’ costs. Three grounds of challenge had been dismissed. While the claimant had succeeded to some extent on ground 4, the reductions had been relatively modest, a number of the arguments advanced by the claimant in respect of even that ground had been rejected, and the reductions had been less than the interested parties had offered to accept.

The first and second interested parties had had the same representation. The third interested party had been separately represented. It did not automatically follow that the claimant should be required to bear two sets of costs. However, on the facts of the present case, that was justified.

(2) To be recoverable, on either the standard or indemnity basis, costs had to have been actually and reasonably incurred and to have been reasonable in amount (see CPR 44.3(1)). However, if costs were assessed on the standard basis, they had to also have been proportionate and any doubt as to proportionality or reasonableness was resolved in favour of the paying party (CPR 44.3(2)).

There had to be something which took the case out of the norm to justify the indemnity basis for assessment. In the present case, there were two features of the claimant’s case which took it out of the norm. First, there were the allegations that the interested parties’ claims for costs before District Judge Ikram had been fraudulent and an exercise in fiction. Further, the claimant had argued that privilege could not be used to shield an offer to settle of 10 August 2016. Those matters had been rejected as unfounded.

Furthermore, the claimant had failed to beat the third interested party’s part 36 offer and account had to be taken of offers made by the first and second interested parties. Accordingly, under CPR 36.17(4)(b), the indemnity basis for assessment was appropriate.

Westminster Magistrates’ Court: ruling over costs of failed private prosecution

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(3) The usual practice when a defendant was successful in opposing an application for judicial review and was awarded his costs was that he might recover the costs of preparing the acknowledgement of service, but not other costs, until the grant of permission. Ordinarily, a defendant could not recover the costs of opposing the grant of permission at an oral hearing.

Overall, the usual practice should prevail in the present case and, apart from the costs of preparing their acknowledgements of service, the interested parties should not be able to recover their pre-permission costs and should not be able to recover any costs for attendance at the hearing on 12 July 2016. Given the size of the interested parties’ costs bills, summary assessment of the costs was not appropriate. There would have to be a detailed assessment if the costs could not be agreed. Further, in the present circumstances, there was good reason not to require any payment on account.

Alun Jones QC and Thom Dyke (instructed by Keystone Law) for the claimant. Justin Fenwick QC and Andrew Bodnar (instructed by Bryan Cave) for the first and second interested parties. Adrian Darbishire QC (instructed by Peters and Peters) for the third interested party.

Legal aidHB v A Local Authority (Local Government Association intervening) [2017] EWHC 524 (Fam)

The case concerned a mother, HB, and her two children, ML (aged six) and BL (aged three).

The local authority alleged that HB, on one occasion, had taken the children to a town in Turkey close to the Syrian border, that on two occasions she had been stopped leaving the country with large sums of money, that she had sought to provide funds to persons associated with the so-called Islamic State, that she held and sympathised with extremist views and that, within that context, she had placed and was at risk of placing her children at risk of significant harm.

In August 2016, the authority instigated proceedings. The authority had chosen to issue wardship proceedings in respect of the children under the inherent jurisdiction of the High Court. The authority were given permission to invoke the inherent jurisdiction pursuant to section 100 of the Children Act 1989.

Prior to the final hearing, HB applied for a costs funding order against the authority requiring the authority to fund her legal advice and representation. HB’s application for funding from the Legal Aid Agency had been refused in circumstances where her disposable income exceeded the monthly income threshold. HB had asserted that after her outgoings were taken into account, she was left with a sum which was insufficient to privately fund legal representation.

It fell to be determined whether the court had power, under its inherent jurisdiction, to make a costs funding order against a local authority requiring it to fund legal advice and representation for a parent in wardship proceedings brought by the local authority where that parent had lawfully been refused legal aid.

HELD: The application would be refused.It was an established principle that authority

for public expenditure required clear statutory authority, which authority had to itself be in clear, express and unambiguous language. Within that context, a general power or duty could not be used to circumvent a clear statutory code. Where Parliament had made detailed provisions as to how certain statutory functions in respect of legal funding were to be carried out, there was no scope for implying the existence of additional powers which lay wholly outside the relevant statutory code.

The inherent jurisdiction of the High Court had not given the court the power to require a local authority to incur expenditure to fund the legal representation of a litigant in wardship proceedings who had been lawfully refused legal aid in accordance with the statutory legal aid scheme put in place by Parliament. There was no suggestion in the statutory code that Parliament had intended the civil courts to be able to make orders providing for funding for advice and representation outside the terms of the statutory scheme.

To make the order sought by HB would contradict the principle that a general power could not be used to circumvent a clear statutory code.

Charles Hale QC and Christopher Barnes for HB. Teertha Gupta QC and Oliver Jones for the local authority.

Indemnity costsCar Giant Ltd and another v Mayor and Burgesses of the London Borough of Hammersmith [2017] EWHC 464 (TCC)

The action concerned a claim for damages for dilapidations, following the expiry of the defendant local authority’s lease. In earlier proceedings in March 2017, the court gave judgment in favour of the claimant (Car Giant) in the sum of £179,125, together with interest in the sum of £15,853.81.

On 16 April 2014, the authority had made a part 36 offer in the sum of £250,000. Car Giant did not beat that offer and, accordingly, it was common ground that it should pay the authority’s costs from the 7 May 2014, namely, the expiry of the relevant period, together with interest on those costs at 1% above base rate.

In such circumstances, the usual order would be that the authority should pay Car Giant’s costs to 7 May 2014, with all such costs being subject to a detailed assessment on the standard basis. However, the authority

Mother seeking legal aid funding was stopped leaving country with large sums of cash

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made a number of submissions in respect of the appropriate order for costs.

The authority submitted, among other things, that Car Giant should be ordered to pay its costs incurred before 7 May 2014. It contended that, in about September or October 2010, it had made an offer of settlement of £250,000, and that in April 2015, an employee of the authority had written an internal email referring to an offer in the sum of £315,000 which offer, the email stated, had been rejected by Car Giant.

Second, the authority submitted that the basis of assessment of the costs, both before and after 7 May 2014, should be on an indemnity basis due to unreasonable delay in agreeing to mediate or take part in some form of alternative dispute resolution (ADR). The delay alleged was from 26 January 2015 to October 2016. Although the question of mediation had been mentioned later in 2015 and early in 2016, it had again surfaced directly in October 2016, following which Car Giant had agreed to mediate. That mediation had taken place in January 2017, but had not been successful.

Criticism was also made of Car Giant’s solicitors’ alleged delay in responding to certain letters. The authority also sought interest on its costs and a payment on account of costs. Consideration was given to CPR 36.17 and 44.

HELD: (1) In accordance with CPR 44.2, the court was given a wide discretion as to the award of costs. The general rule was that the unsuccessful party would be ordered to pay the successful party’s costs, but the court might make a different order and CPR 44.2(4) required the court to have regard to all the circumstances, including certain matters specified in CPR 44.2(4)(a) to (c).

Car Giant was properly to be regarded as the successful party in respect of the period to 7 May 2014. It had started the action seeking to recover damages, in which it was eventually successful and prior to 16 April 2014, there had been no part 36 offer. As regards the offer made in or about September or October 2010, that offer had been subject to the authority’s approval and there was no evidence that that had been forthcoming.

Car Giant’s conduct, prior to 7 May 2014 could not be said to be so egregious that it would be right to deprive it of its prima facie entitlement to costs in that period as the successful party. However, it was right to

reflect the fact that, ultimately, the authority had been more successful in its general approach by reducing Car Giant’s entitlement to 50% of its costs to 7 May 2014, to be assessed on the standard basis.

(2) Under CPR 36.17, where a claimant made a proposed offer of settlement, and obtained a judgment at least as advantageous as that offer, the court had to, unless it considered it unjust to do so, order that the claimant was entitled to indemnity costs from the date of expiry of the relevant period. It was noticeable that there was no such presumption where the claimant failed to better a defendant’s offer. Nevertheless it was clear that the court might order that the costs were to be assessed on an indemnity basis under CPR 44.3.

A court should be slow to conclude that delay in agreeing to mediate or take part in some form of ADR was unreasonable or that, if it was, it would justify an order for indemnity costs. In such situations, mediation had taken place and, by definition, had been unsuccessful. While, in some cases, early mediation was more likely to succeed, it could not be said to be true in all cases. The courts should be slow to criticise a party’s behaviour where decisions such as when to mediate were matters of tactical importance where different views might legitimately be held.

Car Giant had taken the view that mediation was more likely to succeed when the experts’ views had been fully set out. That had been a perfectly possible point of view. It could not be said that, had mediation taken place in about May 2015, it would have been likely to have been successful. In other words, any delay in mediating could not be shown to have caused any increased costs.

While there was some validity in the criticism of Car Giant’s solicitors in their delay in responding to the letters, the delay had not been such or so great that it would justify the order sought. While it was accepted that there had been settlement discussions and that an offer of £315,000 might well have been indicated, the court was not satisfied that it had ever become sufficiently formalised so that it should influence its decision on costs.

The authority’s costs after 7 May 2014 should be assessed on the standard basis. In accordance with CPR 36.17(3)(b), interest would be ordered on those costs at 1% above base. Assuming that the figure of £110,000 represented a reasonable estimate of

recoverable costs for the whole action, the court could not imagine that Car Giant would recover more than £25,000 in respect of its recovery of 50% to the 7 May 2014. The interest payable would affect those figures.

Nevertheless, a reasonable sum on account of costs would be 80% of £85,000, namely £68,000. Car Giant would be ordered to pay that sum to the authority within 14 days of the present date. Further rulings were made.

Neil Mendoza (instructed by IBB Solicitors) for the claimants. Tiffany Scott (instructed by Browne Jacobson) for the authority.

Costs ordersSony/ATV Music Publishing LLC and another v WPMC Ltd (In Liquidation) and another [2017] EWHC 389 (Ch)

In May 2012, the claimant companies (together, SATV) commenced proceedings in respect of actual or threatened infringement of its US and UK copyrights by, among others, the first defendant company (WPMC). At that time, WPMC was under the ownership of H. In December, H approached B, a venture capitalist, with regard to him making investments in companies controlled by H. In January 2013, H resigned and B was appointed the sole director of WPMC.

In July 2015, the court gave judgment in favour of SATV on its claim against WPMC. The court ordered that, among other things, WPMC should pay SATV’s costs, assessed on the indemnity basis. In August, WPMC went into liquidation. SATV applied for an order under section 51(3) of the Senior Courts Act 1981 that B should pay most of the costs of SATV’s claim against the defendants.

First, SATV relied upon four principal factors as justifying making a costs order against B, namely: (i) he had stood personally to benefit from WPMC’s defence of SATV’s claims; (ii) he had personally funded that defence; (iii) he had exercised control over it; and (iv) he had done so in circumstances where WPMC had been insolvent.

Second, B relied upon a number of factors as rendering a non-party costs order against him unjust. In particular, he stressed: (i) WPMC’s prospects of success; (ii) its attempts to settle the claim; (iii) SATV’s motive for pursuing the claim; and (iv) SATV’s failure to warn him that it might seek such an order prior to 7 July 2016. Consideration was

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given to two offers made to settle the claim by SATV under CPR part 36.

HELD: The application would be allowed.(1) Regarding the factors relied upon by SATV, on the evidence, B had caused WPMC to defend SATV’s claim with a view to his personal benefit. As a matter of economic reality, no other shareholders had stood to benefit. There was no dispute that B had partly funded WPMC’s defence of SATV’s claim. Nor was there a dispute that, from January 2013 until August 2015, B had controlled WPMC and, in particular, had controlled its defence of SATV’s claim.

Further, although B disputed that WPMC had been insolvent, its accounts for the years ending in May 2012, 2013 and 2014 showed that it had been balance sheet insolvent in each of those years, and that its deficiency had increased each year.

(2) Regarding the factors relied upon by B, it was not necessary for SATV to show that B had acted improperly, and that factor was of little assistance to him. While B had made offers to settle the claim and had responded constructively to offers made by SATV under CPR 36, he had not accepted either of the part 36 offers, and SATV had obtained a judgment at least as favourable as one of the offers that it had made.

SATV had not behaved improperly in bringing the claim. It had sought to prevent any further exploitation of the documentary in a way that infringed its UK or US copyrights. That was an entirely legitimate objective. It could be fairly said that SATV had pursued its claim in circumstances where it had either known or should have appreciated that WPMC would had been unlikely to be able to pay the costs and where WPMC’s only apparent asset was its rights in the documentary.

Regarding the absence of warning, the court was not convinced that, if SATV had warned B that it might seek a costs order against him, B would have acted any differently.

The factors relied upon by SATV pointed to the conclusion that it would be just to require B to pay SATV’s costs from 4 January 2013. B was the real party, since he had controlled and partly funded the defence of WPMC’s claim with a view to his own benefit, and therefore it was right that he should pay the costs that SATV had incurred as a result.

Ian Mill QC and Andrew Scott (instructed by Lee and Thompson) for SATV. Benjamin Williams QC (instructed by Simons Muirhead and Burton) for B.

Interest on costs

Sony/ATV Music Publishing LLC and another v WPMC Ltd (In Liquidation) and another [2017] EWHC 456 (Ch)

The claimant companies (together, SATV) had brought proceedings in respect of alleged infringement of copyright by, among others, the first defendant company. In July 2015, the court had ordered WPMC to pay SATV’s costs on the indemnity basis from 26 July 2014 on the ground that SATV had obtained a judgment which was at least as advantageous as their part 36 offer dated 4 July 2014, and that WPMC should pay interest on SATV’s costs from 26 July 2014 at the rate of 8% above base rate.

As reported above, the court had ruled in March 2017 that an individual, B, should pay SATV’s costs from 4 January 2013. A dispute arose in respect of the interest, if any, to be paid.

B submitted that he should not be required to pay any interest on SATV’s costs at all on account of SATV’s delay in bringing its claim, and, in the alternative, that he should not be required to pay interest on SATV’s costs from 26 July 2014 at the rate of 8% above base rate, but at a lower rate, not exceeding 3% above base rate.

SATV submitted that, given the finding in the March judgment that, from 4 January 2013, B was the real party who had controlled and partly funded the defence of SATV’s claim, with a view to his own benefit, it was not open to B to go behind the order dated 15 July 2015.

He further contended that, if B wanted to contest the award of 8% interest, then he should have instructed counsel for WPMC to do so on that occasion.

HELD: In making a non-party costs order, the court was not determining legal rights and obligations, but exercising a statutory discretion. That being so, it was open to the court to decide when exercising that discretion not merely the principle of whether the non-party should be ordered to pay costs, but also the quantum of the costs which it would be just to require the non-party to pay.

Given that the court had already decided that WPMC should be ordered to pay interest on SATV’s costs since 26 July 2014, because SATV had obtained a judgment at least as advantageous as SATV’s part 36 offer, the onus lay on B to show why it would not be just for the same reason to require B to pay interest at the same rate and for the same period.

It was not accepted that SATV had been guilty of any delay which would justify it being deprived of interest on their costs. SATV had not been in position to make the application prior to 1 July 2015. In respect of B’s secondary submission, namely that he should not be required to pay interest at a rate exceeding 3% over base rate, the court was bound by McPhilemy v Times Newspapers Ltd [2001] 4 All ER 861 and KR v Bryn Alyn Community (Holdings) Ltd (in liquidation) [2003] All ER (D) 347 (Mar) to hold that an order for interest on costs, under what was now CPR 36.17(4)(c), should be primarily compensatory, although it might have a penal element.

It followed that the rate of interest should reflect, albeit generously, the cost of money. Accordingly, the court accepted the submission of counsel for B that the appropriate rate to order B to pay was 3% above base rate.

Ian Mill QC and Andrew Scott (instructed by Lee and Thompson) for SATV. Benjamin Williams QC (instructed by Simons Muirhead and Burton) for the costs defendant.

Judicial reviewR (on the application of Gudanaviciene) v Immigration and Asylum First Tier Tribunal [2017] EWCA Civ 352

The Secretary of State decided to deport the claimant following her conviction for unlawful wounding. The claimant sought judicial review of the decisions of the First-tier Tribunal

Copyright infringement case: order for interest on costs was primarily compensatory

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(Immigration and Asylum Chamber) (the FTT) to refuse an adjournment of her appeal against the Secretary of State’s decision pending the resolution of her previous application for judicial review.

The appeal was ordered to be adjourned. The claimant then applied for the costs of the judicial review proceedings against the FTT to be paid by the FTT. The judge refused that application on the basis that costs would only be ordered against a tribunal if there had been a flagrant instance of improper behaviour on its part, as required by R (on the application of Davies) v Birmingham Deputy Coroner ([2004] 3 All ER 543), and no such behaviour had occurred.

The issue for determination was whether the approach of M v Croydon London Borough Council ([2012] 3 All ER 1237), that a judicial review claimant who obtained the relief which he sought, whether by court order or settlement, should normally be awarded his costs, should be applied, not only in cases where costs were sought against the other party to the proceedings, such as a government department or local authority, but also in cases where the only other party was the tribunal which had made the decision subject to judicial review.

HELD: The application would be dismissed.The claimant put altogether too much weight

on the decision in Croydon. In the first place, that was a case in which there had been an identifiable authority which had been a party to the litigation and it had been that party who had been liable to pay costs. In the present case, there was no such party. It did not follow, nor did Croydon require, that the FTT itself should be liable for the costs. Croydon had not considered the liability of inferior tribunals for costs orders at all, while Davies had. Therefore, it was Davies by which the court was bound.

Second, Croydon had not, in reality, constituted a new approach. It had not changed the position as far as court orders were concerned. In such cases, it was and always had been, axiomatic that, if there had been a substantial defendant who had opposed the order made, that defendant should pay the costs, in the absence of strong reason to the contrary. The only way in which Croydon could be said to have made new law was in relation to settlements, but even in that respect its newness was more apparent than real.

That new ground had no relevance to the

present case in which there was no doubt that the claimant had been the victor and the only question was whether she should obtain an order for costs against the counter-party to the litigation. On that question, Croydon was silent and could not be said to have departed from, or overtaken, the principles set out in Davies.

Third, there were good reasons why Croydon made no mention of claims for costs against tribunals. Any consideration of the topic would have had to take into account, not only the stream of authority of which Davies was only the culmination, but also the novelty of the idea that any tribunal should, as a matter of normal course, be liable for paying the costs of setting aside one of its orders if the party against whom proceedings was brought did not seek to defend the tribunal’s order.

It would be a serious step to say that, in any undefended appeal or judicial review, the tribunal would be at risk as to costs and any such conclusion could not be implied into the decision in Croydon.

Richard Drabble QC and Ranjiv Khubber (instructed by Turpin Miller) for the claimant. Alex Hutton QC and Paul Joseph (instructed by the Government Legal Department) for the FTT.

Security for costs

Vald Nielsen Holding A/S and another company v Baldorino and others [2017] EWHC 1033 (Comm)

The proceedings concerned the sale of a company, Updata, as part of a management buy-out in July 2009. The defendants were three members of the former management of Updata who participated in the management buy-out. The claimant shareholders in Updata commenced proceedings, claiming that, among other things, as a result of fraudulent misrepresentations by the defendants, they had sold their shares at a substantial undervalue. They claimed that, if they had known the truth about Updata’s financial position, they would not have sold their shares at all.

On 16 October 2016, the defendants made an application for an order that the claimants should provide additional security for costs. In December, the court ordered the claimants to provide security for costs in the sum of £1.2m. On 12 January 2017, the claimants were given permission to re-amend the particulars of claim, and the trial was adjourned. On 20 April 2017, the defendants made a second

application for the claimants to provide security for costs.

The principal issue concerned the renewed application for security for costs. The defendants submitted that the court’s decision to allow the claimants to re-amend the particulars of claim, and to adjourn the trial, constituted a material change of circumstances which justified an order for additional security. They submitted that their position was that the prospect of permission to re-amend being granted and the trial adjourned supported a conservative nature of the existing estimate of costs.

HELD: The defendants were broadly correct in their characterisation of the position. In particular, the starting point was that the defendants’ estimate provided in support of the application had not sought to provide an estimate in respect of the defendants’ future costs on the assumption that permission to re-amend was granted and the trial was adjourned. The defendants’ submissions had been designed to support the submission that the estimate of costs was likely to turn out to be a conservative one.

While the judge had awarded a figure based on all the circumstances, including the likely future progress of the litigation, that needed to be read in context. It did not indicate that she had been intending to provide an award of security that would necessarily cover the defendants’ entire costs to trial in the event that permission to re-amend was granted and the trial was adjourned: not least because, while those might have been likely developments, it had not been clear, at that stage, that they would occur.

In the circumstances, it would have been wrong for the court to conclude too readily that there had been no material change in circumstances. That view was supported by the fact that an award of security was designed to take into account the ‘balance of prejudice’; namely that it involved a comparison between the harm that a defendant might suffer if too little security was ordered and the harm that a claimant would suffer if the amount was set too high.

In all the circumstances, it would be appropriate to order additional security amounting in total to £200,000.

Michael Booth QC and Christopher Lloyd (instructed by Keystone Law) for the claimants. Alain Choo Choy QC and Nicholas Sloboda (instructed by Cooke, Young and Keidan) for the defendants. �

Under the microscope - Association of Costs Lawyers

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